Truth in Taxation Public Hearing

MINUTES

TRUTH IN TAXATION PUBLIC HEARING

NOVEMBER 30, 2005

Mayor Jeff Thompson opened the public hearing at 6:30 p.m. Council members present were Jeff Bertram, Tom Lindquist, Dennis Zimmerman, and Jean Soine. Others present were Steve Helget, City Administrator; Jennifer Welling, Administrative Assistant; Ron Mergen, Public Works Director; and Kent Kortlever, Chief of Police.

The Pledge of Allegiance was recited.

Thompson announced that the purpose of the public hearing was to review the proposed 2006 budget and property tax levy.

Helget added that he will present the General Fund and Liquor Store Budget and Ron Mergen will present the Water & Sewer Budget. The budget is a financial tool to help the staff and Council and is also a statement of policy.

Helget presented the proposed 2006 General Fund Budget, recapped as follows:

2006 BUDGET SUMMARY

CITY OF PAYNESVILLE

Proposed

2006 Certified Preliminary Property Tax Levy $488,700

Adjusted

2006 Certified Property Tax Levy$484,100

LGA (Local Government Aid)579,129

Other Revenue492,331

$1,555,560

BUDGETREVENUE

$1,555,560$1,555,560

BUDGET INCREASE 7%

The proposed property tax levy for 2006 represents a 3.9% increase.

The Local Government Aid funds increased $60,000.00; together the increases in 2005 and 2006 brings the City’s LGA allocation back to bout the level it was in 2002.

Helget continued by highlighting some items from the General Fund Budget Comparisons.

BUDGET COMPARISON SHEET
GENERAL FUND
2005 / 2006 / %
ACCOUNT TITLE / BUDGET / BUDGET / (+OR-)
MAYOR AND COUNCIL / 28,595 / 29,331 / 2.5%
RECREATIONAL PROGRAMS / 36,409 / 37,144 / 2.0%
HUMAN RIGHTS / 8,200 / 11,000 / 25.5%
ELECTION / 1,800 / 3,600 / 50.0%
ADMINISTRATION / 130,434 / 134,594 / 3.1%
ASSESSOR / 10,000 / 10,000 / 0.0%
GENERAL PLANNING / 34,644 / 35,330 / 1.9%
MUNICIPALBUILDING / 35,700 / 36,800 / 3.0%
MOTOR VEHICLE / 112,926 / 94,879 / -19.0%
POLICE DEPARTMENT / 325,354 / 365,601 / 11.0%
FIRE PROTECTION / 142,342 / 168,351 / 15.4%
PUBLIC SERVICE-TRANSIT / -0- / -0- / 0.0%
BUILDING INSPECTION / 26,900 / 45,900 / 41.4%
WEED INSPECTION / 689 / 709 / 2.8%
TREE-COMPOST SITE / 14,853 / 18,438 / 19.4%
EMERGENCY SERVICES / 5,225 / 5,000 / -4.5%
ANIMAL CONTROL / 2,815 / 2,875 / 2.1%
STREET & ALLEYS / 138,979 / 152,648 / 9.0%
SNOW & ICE REMOVAL / 42,177 / 42,730 / 1.3%
STREET LIGHTING / 32,500 / 32,500 / 0.0%
LIBRARY / 8,550 / 8,050 / -6.2%
SKATING RINK / 5,000 / 5,000 / 0.0%
BEACHES / 32,876 / 28,388 / -15.8%
MUNICIPAL PARKS / 80,672 / 87,549 / 7.9%
AIRPORT / 59,303 / 80,557 / 26.4%
CABLE TELEVISION / 13,110 / 13,686 / 4.2%
TRANSFERS / 4500 / 2,200 / -104.5%
TRANSFERS (DEBT SERVICE) / 111,500 / 102,700 / -8.6%
TOTAL APPROPRIATIONS / 1,446,053 / 1,555,560 / 7.0%

Human Rights increased due to the entertainment expenses for the Ethic Festival. Elections increased due to having a primary and general election in 2006. Motor Vehicle was reduced due to personnel changes (salaries). Police Department increased due to the proposed hiring of an additional full-time officer in July of 2006 and a new police car. The Fire Department increased due to salary and training increases, developing a Capital Improvement Fund for small equipment, and an increase in the vehicle fund. Building Inspection was increased due to fees to be paid for the new building inspector. Tree/Compost was increased due to the tree grant.

Bertram interjected that the Building Inspection increase is not taking into consideration that the City will be receiving all the permit fees and less staff time allocated to this area.

Street/Alley increased due to the 2006 St. Project, seal coat project and equipment. Debt Service was reduced due to the continuation of paying down on the bonds. Accordingly to the City’s financial consultant, the City debt funds are strong.

Recreational Program Donations included:

RECREATIONAL PROGRAMS

2004 Actual 2005 Actual 2006 Proposed

Paynesville Area Center$9,000$10,500 $10,500

Historical Society$10,000$10,000$10,000

Community Education$5,625$5,309$5,394

Paynesville Community Club $2,000$2,100$2,250

PNLS Hockey Association$5,000$5,000 $6,000

Koronis Hills Snowmobile Club$2,500$2,500 $2,500

After Prom Party$500$500 $500

Total$34,625$35,909 $37,144

Helget added that each of the above entities attended the Finance Committee meeting requesting financial assistance. The maximum amount able to give the Historical Society is $10,000.00; Community Education amount is a 50:50 contribution with the Township (both entities pay $5,394.00) based on expense to run the program. The PNLS Hockey Association increase is due to help cover the costs of operating the compost site (extended hours).

General Fund Salaries and Benefit Percentages of the total budget:

Benefits=4.3%

Salaries=41.2%

Remaining Budget=54.5%

The budget reflects a 1% cost of living increase and no other benefit changes; with the exception of PERA which the State Legislature approved increasing, effective January 2006.

General Fund Expenditures (percentage of total budget):

Miscellaneous=3%

General Government=23%

Public Safety=35%

Building Inspector/Compost Site=4%

Public Works =20%

Parks & Recreation=8%

Debt Service=7%

Bertram questioned why engineering was not broken out? Helget stated that engineering depends on what project it is and built into that category.

General Fund Revenues (percentage of total budget):

License & Permits=3%

Property Taxes=31%

State Categorical Aid=3%

Fines & Forfeits=1%

Charges For Services=20%

Interest=3%

Miscellaneous=1%

State General Purpose Aid=38%

Helget reported on the Airport. The Tee Hangar is full and the garage is rented out. There is someone interested in building a private hangar. In 2005 to date 14,700 gallons of fuel was purchased and 11,500 gallons was sold. The City makes a profit of about $.30/gallon. The City advertises the fuel price on the internet for $60.00 per year. Next year (October) the airport will be listed as a RegionalAirportwith the FAA and will be eligible for federal funding.

There was some general discussion on federal funding reimbursements and how the funds can be used.

Mergen proposed the following in respect to the Water & Sewer Budgets:

• An 8 cent increase in the bulk water rate for 2006.

• Using the 1st quarter water usage to set sewer rates for residential users as we currently use 4th quarter.

• Adding the cost of a standard meter to the $440.00 water connection fee. This cost will be set by resolution.

BUDGET COMPARISON SHEET
WATER FUND
2005 / 2006 / %
BUDGET / BUDGET / (+OR-)
SOURCE OF SUPPLY / 22,570 / 22,820 / 1.1%
PURIFICATION / 28,650 / 29,400 / 2.6%
DISTRIBUTION / 14,500 / 15,000 / 3.3%
ADMINISTRATION / 94,196 / 95,536 / 1.4%
NON-OPERATING / 208,635 / 221,729 / 5.9%
TOTAL APPROPRIATIONS / 368,551 / 384,485 / 4.1%
2006 WATER RATES
2005 / 2006
FLAT / 13.63 / 13.63
MULTI UNITS / 10.22 / 10.22
BULK 2,001 TO 99,999 / 1.75 / 1.83
BULK 100,000 TO 500,000 / 1.70 / 1.78
BULK OVER 500,000 / 1.69 / 1.77

Water Fund Expenditures:

Non-Operating Expenses=57.7%

Source of Supplies – Wells=5.9%

Purification=7.6%

Distribution=3.9%

Salary/Benefits=16.0%

Administration=8.8%

Mergen reported that he is proposing a 10 cent increase in the bulk sewer rate for 2006.

BUDGET COMPARISON SHEET
SEWER FUND
ACCOUNT TITLE / 2005 / 2006 / %
BUDGET / BUDGET / (+OR-)
SEWER:
COLLECTIONS / 13,450 / 13,950 / 3.6%
DISPOSAL / 27,800 / 29,750 / 6.6%
ADMINISTRATION / 110,289 / 111,913 / 1.5%
NON-OPERATING / 202,000 / 217,252 / 7.0%
IRRIGATION:
ADMINISTRATION / 101,323 / 99,828 / -1.5%
AERATION POND: / 71,000 / 72,000 / 1.4%
TOTAL APPROPRIATIONS / 525,862 / 544,693 / 3.5%
2006 SEWER RATES
2005 / 2006
FLAT / 15.98 / 15.98
MULTI USER / 11.99 / 11.99
BULK / 1.89 / 1.99

Sewer Fund Expenditures:

Aeration Pond=13%

Irrigation Administration=10%

Irrigation – Salary/Benefits=8%

Non-Operating =41%

Sewer Administration=8%

Sewer – Salary/Benefits=12%

Disposal=5%

Collections=3%

Homeowner Based on 17,000 gallons

Old-Actual Bills Proposed- 8 cent increase on water

10 cent increase on sewer

Water 39.88Water 41.08

Sewer 44.33Sewer 45.83

84.21 86.91

Difference: 2.70/qtr or .90/mo

Industry Based on 500,000 gallons

Old-Actual Bills Proposed- 8 cent increase on water

10 cent increase on sewer

Water 865.13Water 904.97

Sewer 957.20Sewer 1,007.00

1,822.33 1,911.97

Difference: 89.64/qtr or 29.88/mo

AMPI Based on 8.5 MG Sewer

6.0 MG Water

Old-Actual Bills Proposed- 8 cent increase on water

10 cent increase on sewer

Water10,140.00Water 10,620.00

Sewer 16,070.00Sewer 16,920.00

26,210.00 27,540.00

Difference 1,330.00/mo

RATE COMPARISONS

WATERSEWER

QUARTERLY QUARTERLY

CITYFLAT RATE BULKFLAT RATE BULK

Avon 15.75 1.84 25.203.66

Cold Spring 12.00 1.40 27.002.98

Melrose 11.67 .98 27.18 2.35

Paynesville 13.63 1.83 15.981.99

Sauk Centre 27.21 2.46 16.384.70

New London 39.60 3.48 59.406.68

EdenValley 22.50 5.00 18.002.50

Richmond 18.00 2.50 20.00 4.00

WATER/SEWER CONNECT FEE COMPARISON

CITYWATER CONNECT SEWER CONNECT

Avon 1,000.00 + 350 Meter + 100 Insp 4,000.00 + 100 Insp

Cold Spring 900.00 2,700.00

Melrose 680.00 + 70 Meter 850.00

Paynesville 440.00 Standard Meter incl 560.00

Sauk Centre 545.00 (1091-2inch) 545.00

New London 500.00 + 750 Green LakeDist 500.00

EdenValley 500.00 500.00

Richmond 1,750.00 2,000.00

Watkins 1,250.00 1,250.00

CITY OF PAYNESVILLE

RATE INCREASE HISTORY

YEARWATER SEWER

200511 cents 8 cents

2004 11 cents 0

2003 5 cents 2 cents

2002 5 cents 5 cents

2001 0 2 cents

200011 cents 0

1999 8 cents 0

PROJECTED REVENUE

WATER

Proposed

Flat Rate 13.63 49,068 Budgeted

Multi Users 10.22 10,220 Expenses

Bulk 80MG @ 1.83 146,400

Bulk 100,000 to

500,000 35MG @ 1.78 62,300

Bulk over 500,000

65MG @ 1.77 115,050

Interest Income 7,000

Total 390,038 384,485

PROJECTED REVENUE

SEWER

Proposed

Flat Rate15.98 57,528 Budgeted

Multi Users11.99 11,990 Expenses

Bulk 202 MG x 1.99 401,980

Income-Original Pivots 17,880

Income-North Pivots 20,200

Interest Income 5,000

AMPI

Pretreatment Utility Chg 38,400

Total 552,978 544,693

Cash Balances as of October 31, 2005

Water Fund 327,030

Water Equipment Replacement Fund 80,005

Sewer Fund 214,872

Sewer Equipment Replacement Fund153,098

Water Capital Improvement 172,296

Sewer Capital Improvement 486,967

Lindquist asked where the money would come from if the City would purchase the Schauman property? Mergen said the Sewer Capital Improvement Fund.

Bertram asked if the City had sold any or all of the surplus pipe yet? Mergen said no, but it is in North Dakota and General Irrigation has had some interest and plan to sell it this coming spring.

Helget reviewed the following:

BUDGET COMPARISON SHEET
LIQUOR FUND
ACCOUNT TITLE / 2005 / 2006 / %
BUDGET / BUDGET / (+OR-)
OFF-SALE PURCHASES / 518,500 / 544,000 / 4.7%
SALARIES / 107,611 / 105,863 / -1.7%
OTHER EXPENSES / 92,067 / 96,198 / 4.3%
TRANSFERS / 27,500 / 10,000 / -175.0%
TOTAL APPROPRIATIONS / 745,678 / 756,061 / 1.4%

Helget reported that this year’s liquor sales will exceed last year’s sales. 2004 was the only year the Liquor Store did not increase the previous year’s sales; according to Marilyn Fuchs, Liquor Store Manager in the 14 years she has been manager it was the only year there was a decrease.

Thompson asked if separate numbers were kept on liquor vs. beer and wine sales? Helget said yes.

Helget continued to review the Liquor Fund Expenditures:

Off-Sale Purchases=72.0%

Transfers=1.3%

Other Expenses=10.1%

Overhead=2.1%

Supplies=0.5%

Salary/Benefits=14.0%

Liquor Fund Revenues:

Beer Sales=59%

Liquor Sales=22%

Other Expenses=0%

Sales Tax=8%

Tobacco Sales=1%

Other Merchandise=3%

Wine Sales=7%

REVENUE BUDGET COMPARISON SHEET
LIQUOR FUND
ACCOUNT TITLE / 2005 / 2006 / %
BUDGET / BUDGET / (+OR-)
LIQUOR SALES / 158,000 / 165,000 / 4.2%
BEER SALES / 450,000 / 450,000 / 0.0%
WINE SALES / 45,000 / 50,000 / 10.0%
OTHER MERCHANDISE SALES / 30,000 / 25,000 / -20.0%
TOBACCO SALES / - / 5,000 / 100.0%
SALES TAX / 61,000 / 62,000 / 1.6%
OTHER REVENUES / 2,800 / 3,000 / 6.7%
TOTAL REVENUES / 746,800 / 760,000 / 1.7%

Kortlever mentioned that he did not have any changes to the budget since the last budget work session.

Helget stated that if no continuation of the public hearing is necessary the 2006 Budget and Property Tax Levy will be adopted by the City Council on December 14, 2005 with certification to the County by December 28, 2005.

Thompson stated that no continuation of the public hearing was necessary.

There being no further comments or questions, the public hearing was closed at 7:14 p.m.

Steven Helget, City Administrator