HomeMy WebLinkAbout7B - 2008 Budget Presentation
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
AUGUST 6. 2007
7B
Ralph Teschner, Finance Director
PRELIMINARY 2008 BUDGET PRESENTATION
Introduction
The purpose of this agenda item is to provide the City Council with an initial
presentation of the City of Prior Lake's proposed 2008 Operating Budget and
Enterprise Fund Budgets and to provide an early estimate of the property tax
impact associated with this budget and special debt levies. It is intended to
give the Council an early opportunity to become familiar with the proposed
budget information before the formal August 20th scheduled workshop.
Current Circumstances
Attached within a bound folder for your review are the following documents;
1. "Executive Proposed Budget Summary"
2. "Estimated 2008 Property Tax Impact Analysis"
3. Spreadsheet identifying the historical trend of budget expenditures.
Also included is a list of Cost Effective Efforts that have either been recently
implemented or are planned in next year's budget. This report is in response to
a request by the City Council to move away from the traditional methods we
have used in the past to utilizing more innovative methodologies to economize
the delivery of city services across the board.
Outlined below are the proposed increases from 2007 to 2008;
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The major influences that drove the budget for 2008 are identified below;
1. $113,344 - Two (2) additional positions. A Senior CenterNolunteer
Coordinator and Building/Facilities Superintendent
2. $325,166 - labor ContracUPERA Mandate (5%)
3. $26,280 - Fuel (11 %)
4. $36,060 - Insurance (9.9%)
5. $28,797 - Debt Service (2%)
6. $59,000 - legal (20%)
7. $75,000 - Fiber technology plan
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
8. $92,800 - Utilities (17%)
9. $50.000 - Contingency (20%)
$806,447
These nine (9) categories totaled $806,447 and represented 88% of the entire
proposed 2008 budget increase.
ISSUES:
As the Council can see by reviewing the major influences on the budget,
personnel costs account for more than 40% of the increase. These are wage
and health insurance costs already negotiated with our bargaining units. In
addition the legislature increased the city and employee retirement contribution
in an attempt to keep the PERA pension fund actuarially sound.
A second major area of new cost is new personnel. Since we have added two
new buildings and will soon be adding two more, a building superintendent
position has been added. The purpose of this position is to maximize our cost
effectiveness in the operation of our buildings and foster aggressive preventive
maintenance programs to preserve these long term community investments. It
is probably no surprise to the Council that many of the significant cost
increases are related to buildings i.e. insurance, utilities and operational costs.
The last four categories are fuel and legal costs, an allocation for a fiber
technology plan plus an increase in the contingent reserve. The Council has
adopted a program for conversion which will help address fuel issues. The
legal costs have been running higher as our City grows and encounters
various issues. Also prosecution activities have increased as well. With respect
to the contingency we have tried to maintain a 2'Y2% reserve of our current
operating budget level in the past which is the reason for the proposed
$50,000 adjustment.
FINANCIAL
IMPACT:
Market valuation numbers and Prior lake's fiscal disparities distribution
amount are first run numbers provided this past week by Scott County. Both
are necessary to calculate an accurate estimate of proposed property taxes for
payable 2008. In utilizing these numbers new valuation will pay for the first
$325,000 of the proposed 2008 property tax increase. This would leave an
estimated increase of $50.36 or 5.36% for remaining existing property tax
payers. These numbers are based upon a $300,000 home in 2007 adjusted by
a market inflation of 5% for payable 2008. For budget consideration each
incremental budget increase of $75,000 is equivalent to approximately a 1 %
property tax increase.
No action is required. It is intended that you bring these budget materials to
the August 20th, 2007 scheduled budget workshop for continued discussion.
Final direction will be necessary at the workshop as Council adoption of the
2008 preliminary budgets and property tax levy must occur at the September
4th City Council meeting. A resolution, approving both, must be certified to the
Scott County Department of Taxation by September 15, 2007 as required by
state law.
RECOMMENDED
MOTION:
2008 Budget
CONTINUING EFFORTS TO BE
MORE COST EFFECTIVE
All Activity Areas
VENDOR LIST / PROFESSIONAL SERVICE QUALIFICATION In an effort to sponsor
greater competition in City purchasing, the Vendors List and Professional Service Qualification
Process is to be implemented this coming year.
41820 - Personnel
1. RECRUITMENT U sing a package with Star Tribune that allows midday service and e-
mail updates. Keeps certain jobs local (e.g. maintenance) only.
41830 - Communications
1. TRICASTER City cable productions are shot in our studio or on location. The graphics,
titles, and music are added after the fact. This means that to produce a 60-minute
production actually requires three hours. An investment of $11 ,000 could reduce the
production time by one-third and result in better, more professional looking productions.
A cable TV account was established some years ago for this purpose so there is no impact
upon the tax levy but we will be able to produce more and better productions.
2. WEBCASTING/VIDEO ON DEMAND 74.9% of the households in Prior Lake have
broadband access to the Internet by cable modem or DSL. This is one of the higher
percentages in the twin city area. To increase the value of the Website to anyone who has
high speed access, Web casting and Video On Demand is intended to be offered. Users
will be able to view the Webcam and see all cable TV television productions even if they
do not subscribe to cable television.
41910 - Planning and Building
1. SUBSTITUTING ELECTRONICS FOR PAPER More information is provided by
telephone saving the customer gas, time and paper.
2. USING BUILDING INSPECTORS TO DO PLANNING INSPECTIONS Because they
are already in the field, time and gas can be saved rather than sending a planner out.
3. TICKET WRITER See Police.
41920 - Data Processing
1. VENDOR LIST Is used to play vendors off one another for computer hardware. Use
four vendors to get best price.
2. PDAs A considerable amount of time is spent setting up meetings for the city council.
Our hope is that we can improve our effectiveness in this area and improve
communications with the council through the utilization ofPDAs.
'.FRANKI200T<'Ci Budget Cos' :C' c.L-:e.doc
3. ANNUAL SOFTWARE SERVICE AGREEMENTS We used to update our software
agreements every few years when we replaced or updated software. The costs associated
with this practice were significant. Weare now writing annual agreements to even out
those costs. The most significant area of savings is engineering given the cost of the
software they employ.
42100 - Police
1. TICKET WRITER Each squad car will receive an automated ticket writer which takes
advantage of our extensive computer system and Internet capabilities. This means less
time writing out a ticket because a swipe of the license populates the relevant
identification fields. The data is automatically downloaded into the system relieving the
support staff from having to key stroke the data from paper as was done before. For code
enforcement the same savings will be possible with the added advantage that when
necessary the citation can be delivered in the field face-to-face.
2. DWI AND DRUG FORFEITURE FUND USAGE Certain drug and alcohol violations
can result in the loss of assets to the violator. The city receives a portion of the forfeiture
funds which must be used to improve drug and alcohol enforcement. We presently have a
balance of $60,000 in this account. We own a 1984 SWAT vehicle which used to be a
fire department ambulance in the days when we provided such service. The vehicle is in
need of replacement to provide our Tri-City S W AT Team with the personnel transport
periodically needed to fulfill their responsibilities. We expect that $45,000 will be needed
from this account for this purpose.
The police motorcycle will also be replaced from this account. Our lease has grown from
$1 a year to $2,500 and the cost to convert the vehicle for police purposes. Since we will
need the police vehicle to provide future services, this account can provide the available
funds. The return on investment for this decision is less than 10 years.
By making these acquisitions from this account rather than the equipment matrix, the tax
support to fund the account is minimized translating into lower property taxes.
3. E-85 Ford is considering offering a police interceptor in 2008-2009 with flexible fuel.
We will monitor and support such efforts. Weare working to reduce gas usage by
parking equipment in the heated garage this winter rather than idling outdoors.
42200 - Fire and Rescue
1. DUTY CREW Every night one officer and 2 to 4 firefighters are responsible for first
call response to calls. This new practice guarantees response, reduces the number of
responders to the number needed, conserves energy, save money and improves safety by
keeping vehicles off the street.
All Maintenance Divisions
1. PRIVATE CELL PHONES We are very dependent upon temporary maintenance
employees year-around in all divisions. In an effort to improve safety and productivity we
have prohibited privately-owned cell phones and the non-work-related phone calls they
invite from the worksite.
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43050 - Engineering
1. PROJECT INSPECTION Presently, on street reconstruction projects, we use an hourly
employee to do inspection/customer service. The employee typically works 12 hours a
day, five days a week spring, summer and fall amassing significant overtime. We are
considering an intern as an assistant who might be available afternoons/evenings and
weekends to spell the inspector to promote better customer service.
2. RECONSTRUCTION NOTICES A YEAR IN ADVANCE So that property owners in
coming year project areas do not make improvements to their driveways, we provide this
advance notice. We have learned from previous projects that property owners appreciate
the advance notice so they don't complete significant driveway reconstruction only to
have it damaged by street reconstruction.
3. SURVEY EQUIPMENT We used to buy the equipment. Now we rent it. This saves
considerable money and improves the dependability of equipment we use no more than
three weeks in a year. The purchase cost is $10,000, refurbish cost is $5,000 and rental is
$1,000.
4. CONSULTANTS Rather than hire two full-time staff members, we use consultants
during the seven-month construction season. Even though these costs are paid by
developers, this practice results in a significant cost savings and does not leave us with
"extra" staff during the winter months.
43100 - Streets
1. ELIMINATION OF LIQUID DE-lCER IN THE DOWNTOWN We have discontinued
the use of liquid de-icer because it did not provide the performance we desire. In lieu of
liquid de-icer, we will use salt on the downtown sidewalks.
2. SUBSTITUTING GEOMEL T FOR CLEARLANE Streets will be changing their
approach to snow and ice control. They will be moving to less dependence on Clearlane.
Instead they will use Geomelt and salt brine. The reasons are that Clearlane is expensive
and Geomelt is an ecologically friendlier solution made out of sugar beets. (So
pretreatment will be brown rather than white.) A greater effort will be made to match
products to temperature - from cold to colder: a) brine, b) brine/Geomelt mix, c)
Clearlane. Also spending $5,000 to upgrade trucks to apply less product per truck per
street mile. The net impact will be saving money, being equally effective and being more
ecologically responsible.
3. MORE EFFECTIVE USE OF OIL-BASED PRODUCTS This account has increased
over 18%. This means we need to be more cost-effective in our use of oil-based products.
The most fundamental change we will make is to overlay right. That means: a) adjusting
manholes and pipe valves, b) using fabric on certain streets under overlay, c) looking at
fabric under crack sealing - significant cost increase but drives off future repair costs.
Also changing oil to more rubbery - not as much damage from wheel turns. Even though
over $175,000 only finishes 1.5 miles, it is more effective in getting more vendors and,
therefore, more competitive bids which completes the greatest possible area. Also looking
at full street mill rather than a edge mill which can just cover the problem rather than
remove it.
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4. STREET LIGHTING There are three different electric companies serving Prior Lake.
Each is becoming less responsible for street lights. We are doing an inventory of street
lights so we can project maintenance and replacement costs. Then we can evaluate
whether we should contract out or do the work ourselves.
5. VALVE EXERCISERS Our objective is to exercise all of our 2,000 valves once each
year. This is a savings in four ways: 1) less personal injury accidents; 2) one person
rather than two persons doing the work; 3) less valve replacement; and 4) fewer valve
failures in an emergency.
43400 - Central Garage
1. SANDBLASTING / PAINT BOOTH Built sandblasting and paint booth at the old
maintenance building. One trailer and a tanker truck have been refurbished using this
facility. Work included welding seams, sandblasting, and repainting. As a result we do
not have to replace tanker at +/- $172,000. The cost to refurbish the tanker was $10,000
($5,000 materials/$5,000 labor). This investment allows us to move back tanker
replacement from 2006 to 2012. The trailer to be replaced in 2006 is now moved to
2018. To replace the trailer would have cost $7,000. The refurbish cost for the trailer was
$1,500. Five (5) one-ton trucks are to be refurbished in the coming year.
2. EQUIPMENT OPERATOR'S CHECKLIST Some of our newer equipment is very
sensitive to oil level and age. In some cases, especially with equipment used by numerous
operators, oil levels were not being checked with each refueling. Now with each fill up
we are receiving reports about the equipment in an effort to stave off major needless
repair bills.
45100 - Recreation
1. MATCHING TEMPORARY PAY RATES TO THE MARKET Looking at private
sector temporary employee rate. Looking at playground/tot lot leaders who were getting
a 25~ / 50~ bump each year. Has resulted in a higher-than-market pay range for the city.
Rather than give a bump each year, we are establishing one rate for all employees in ajob
description. In some cases we have rates for 15t year, 2nd year etc.
2. INVENTORY AND STANDARDIZE CONCESSIONS Our concession offerings used
to differ from location to location and we offered some marginally popular items. Now
the items are stored at city hall and distributed to concession areas on an as-needed basis.
This has minimized pilferage and rodent issues and helped us to manage our inventory.
3. BEACH EMPLOYEE MANAGEMENT A hut has been created for lifeguards to take
their breaks in. It doubles as a first aid station. Parking attendants switch off with
concession workers to relieve boredom and enhance accountability.
1:\FRANi<\~::)TL008 Budget effective.doc
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45200 - Parks
1. SUPERVISORY REORGANIZATION We have been concerned about how we can get
better supervision without the overtime exposure. In 2007 and throughout 2008 we are
proposing that our unionized leadperson positions be eliminated and a non-union,
overtime-exempt foreman position be established (one in park maintenance and one for
streets and utilities.) We are proposing to implement this change in park maintenance in
2007. This position will be a true supervisor and will allow Al to focus more on
administrative matters including MPP, city council items and the like. Also, a part-time
position is to be added as a support position responsible for administering bids, quotes
and other administrative affairs. This change saves $9,000 a year, and provides better
supervlSlon.
2. LANDSCAPE SPRINKLER SYSTEMS We are more and more dependent upon
landscape sprinkler systems to provide the watering necessary to allow the field usage
intensity which PAR recommended. We also have city hall, police station and Ryan as
new landscape sprinkling systems in 2007. In 2008, we will have fire station no. 2 and
Memorial added. This has been a catch-as-catch-can maintenance responsibility. One of
our new hires is a sprinkler expert which should get us better at installing and
maintaining. We hope to eliminate violations of our own watering restrictions caused by
broken or misaimed heads.
3. TRAIL AND STREET RECONSTRUCTION- At present our trail maintenance is seal
coating, cutting and patching. We will evaluate in 2010 whether we want to purchase a
bituminous grinder attachment for the front end loader which would allow us to grind
trails out for total replacement. We will evaluate the return on investment. This may be a
piece of equipment which could be purchased jointly with other cities.
49400 Water Utility
1. ACT AS GENERAL CONTRACTOR FOR WELL CONSTRUCTION Our crews have
saved money and built a better product by acting as general contractor for lift station
construction. They estimate they save the mark-up of the general contractor which is 10%
at least. We acted as general for wells 8 and 9. Well 10 is to be installed in 2008. Savings
can be $75,000 or more.
49804 - Transit
1. BIDDING Re-bidding transit resulted in significant savings to Prior Lake and to
Shakopee. The new cost is $459,266 vs. $508,000 and provides more service yet a drop
in cost of $50,000.
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