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Memo-August 22,2008 2009 BudgetCITY OF HOPKINS MEMORANDUM Date: August 22, 2008 To: Mayor & City Council From: Christine Harkess, Finance Director Subject: 2009 Budget FINANCE DEPARTMENT We have received more information from Hennepin County that assists us in determining the impact our tax levy will have on our taxpayers. The levy as it stands is at a 3.9 %.increase that results in a 1.96% estimated tax rate increase. At the previous work session we had over a $300,000 revenue gap between budgeted revenues and expenditures. We have worked that down to less than $90,000 but we are still not quite there. We continue to work with the departments at achieving a balanced budget and our goal is to have the budget balanced by the Tuesday work session. Attached to this memo are the following documents: • The proposed levy for 2009 with the levy limits • Saving and efficiencies that have been realized by the various departments • Unfunded mandates that impact city departments a) O 0 o. 0 O tel a t0 O 0 O O a) N O 1� a 1t0 CO (0 1C) N CO h 69 O O O O O 0 O O Cn r O O O O Cn O O O t0 O J a 0 e E d r c0 O t0 N 00 419. O t0 I0 O O O 414 O) to co 1[) t• 69. 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Inspections • Due to actions by the City Council and the Economic Development Department - over the last five years the Inspections' Department has received more revenue from permits than it has spent on inspections. City Clerk • So far this year (2008), the City has received 992 hours of volunteer service through the Tree Trust program. o Even at minimum wage this was worth over $6,100 this year o We have participated in the Tree Trust program since 2005 • Tree Trust Volunteers also - o Assisted with the new filing system o Provide backup for the receptionist which frees up time for regular employees. 0 • The scanning project also reduced the work that the finance employees had to do during the most recent audit. Finance • Implemented mandatory direct deposit for employee payroll o Reduce need for checks o Reduce time needed for reconciling bank statement • Fully integrated finance, business license, building permits, cash receipting software o Saves time from duplication of entries o Increases accuracy o Quicker updated financials o Staff can access financial information via inquiry function and review their department's financial information • Saves time for the department making the inquiry • Saves time for the finance department who would normally handle the inquiry o Results in better customer service as receptionists can handle most UB inquiries with greater ease. • Monthly financial information is placed on the shared directory rather than printing and distributing o Significant reduction in paper, printing and copying costs o Staff receive financial information in a more timely manner • Maximize electronic movement of city funds o Are able to hold funds longer maximizing interest earnings o Reduce number of checks issued Page 1 of 5 o Receive funds quicker — again maximizing interest earnings o Both incoming and outgoing fund transfers reduce chance for errors in processing • Evaluated audit services, received RFPs from several audit firms and reduced audit costs for the next 4 years by approximately $12- 15,000. • Distribution of 2007 Audit was done on CD ROM or through electronic transmission o Drastically reduced printing, copying and postage costs • Budget, ERP,CIP and CAFR are all placed on the web o Reduced number of copies distributed Police Over the past couple of years, the police department has taken every opportunity to cut costs when appropriate. They purchase bulk items (CDs, DVDs, batteries, supplies, etc.) from wholesale clubs and authorized vendors and use the state and county contracts whenever possible. It is difficult to say what these actual costs savings are, but as an example, a 100 count spindle of CD's is $19.37 at Sam's versus $39.99 from Bertelsen's (city's office supply vendor). They also take every opportunity to obtain donations or grants to fund non - budgeted items such as replacing the old police bike patrol bicycles, money to purchase T -shirts for school patrol appreciation, Reserve vests, special overtime, and compliance checks. • Switched to State of MN contract for Nextel phones - saving $ 163.00 per month ($1956 /year). • Switched to State of MN contract for Sprint PCS cards for mobile data computers — saving $ 115.00 /month ($1378 /year) • Received $74,712 grant for overtime (2007 -2009 for Blake Road Project). • Received $17,000 grant from Bullet Proof Vest reimbursement program (2008 -09). • Switched from custom black and white paint on squads to a black car with a white door wrap, saving $700.00 in vehicle cost and increasing resale at the end of vehicle use by city. • Received $1,200 from MN Police Reserve Officer Association for purchase vests for new Reserves. • Received $1,000 from Glen Lake Optimists for School Patrol and Project Alert. • Solicited and received a donation for $ 2500 to replace two police bicycles over 15 years old. • Received donation of $2,000 for bike patrol (2007). • Received grant of $ 5,432 from CEDAP for rugged night vision equipment. • Received $300 grant from Target for 2008 National Night Out • Received $2,500 from RMG and Jody Grieger to purchase 3 new bike patrol bicycles. • Actively use forfeiture proceedings and auction vehicles to sustain DUI enforcement program. Special DUI enforcement overtime is paid for through these funds, as well as the equipping of the DUI vehicle, all supplies for the Alco- sensors and Intoxilyzer. • Without violating employment contracts, direct exchange time is used to reduce overtime where applicable. • Use in -house talent of employees to work on projects or repairs — saves money not using outside vendors. • See attached for information on squad fuel mileage savings Page 2 of 5 Fire The Fire department does everything possible to reduce costs over the past year. They buy product in bulk from whole sale stores and through consortiums such as the state and with other local department to reduce costs on firefighting equipment. • Daytime medicals o The use of duty crew has saved paging out the fire department for half of the calls that the standby crews have handled. o Estimated saving $17,320.00 • Did not fill final position leaving us at 39 o Estimated savings $4,000.00 • Received $1,000.00 donation from Golden Living Center (for smoke detectors and CO Monitors). • Received $8,000 grant for CERT Team. • Receive donation from local business to off set cost for fire department open house. • Use firefighters to make repairs to equipment and vehicles to save money not using outside vendor. • Did not need to purchase turnout gear o Estimated savings of $6,000 • Enter in to purchasing consortiums for equipment, gear and supplies to receive cheaper rates. • Joint training with other departments to save money on outside training. • Received $75,000.00 grant for Chemical Assessment Team. • Reduce idle and drive time of vehicles at and to calls. If not using the truck it is being turned off to reduce fuel. If trucks are not need they are canceled before leaving station. Public Works • Eliminated the morning work break for Local 49 employees: o This change was negotiated through the Labor - Management Committee o Results in fuel savings by reducing the travel to /from the shop each morning for break and increases workforce efficiency by reducing non - productive time spent on break and to /from the worksite to the shop. o The employees and management are currently considering making this a permanent year -round change vs. a May - September seasonal change. • CBD refuse containers o Installed new containers throughout the Central Business District that allows for servicing with the automated collection refuse truck. o This is a savings in manpower and eliminates a job task that, ergonomically, has a high -risk for back injury or strain and the associated personnel costs. • Fire /alarm central reporting system o Converted to a new system that reports fire, boiler and intrusion alarms from city facilities directly to the new PD dispatch center. o Eliminates annual service contract fees in the amount of $2,500 — this $3,750 project has a 1.5 year payback. • City Hall HVAC upgrade o Upgraded the existing heating and cooling system in City Hall — eliminated an oversized 80 -ton chiller unit with smaller, efficient rooftop units Page 3 of 5 o Will save an estimated $20,000 /year in energy costs — the project has an estimated 5 -year payback. • Hennepin County Dept. of Corrections Sentencing to Service work force o This initiative is a contract with Hennepin County to utilize County offenders guilty of misdemeanor charges to perform a variety of Public Works tasks including: • Excelsior Boulevard corridor maintenance, litter patrol, landscape area maintenance, grass cutting, etc. o The County will provide a 5 -7 person work crew with a Hennepin County employee as a crew leader. o The city cost is about $3 /hr per worker. This is a substantial savings over using $10/hour PW seasonal workers. • Engineenng Tasks o The Engineering Division completed a utility systems rate study in -house in 2007. • If outsourced, this initiative would have cost the city over $10,000. o This Division completes our annual pavement management inspections and completes small project design & construction admin work — ■ Saves thousands /year vs. contracting -out these inspections and design. • Diseased Elm Removals o Over the past few years city crews have removed hundreds of mature elms each year. o Facilitated by the combining of the Street and Parks/Forestry Divisions in 2005 o Larger workforce, including street employees, are used to assist the forestry crew with stump removals in the fall of each year precluding the need for outside contracts. • Building energy efficiency study o Xcel Energy pays 75% of cost: o In 2008, staff will work with Xcel Energy to hire a consulting engineer to survey our oldest buildings to identify the most cost - effective ways to reduce energy consumption. • Water Meter radio read transponder replacements o This meter upgrade will be done by in -house utility employees over a period of 4 - 5 years. o. Doing the installation in -house will save over $250,000 in contract costs. Planning & Economic Development • Obtained EDAM Foundation scholarship for Tara Beard to attend economic development training. • Dow Towers "purchases" decorations for resident functions through a supplier for non- profits. The items are free and all HRA has to pay is shipping. • Think Hopkins marketing campaign utilizes donated services and ad space including billboards and print ads. Secured $5000 annual contribution from HBCA. • Staff was cross - trained and asked to fill in for employee medical leave rather than hiring a temporary employee. • Planning staff has been trained on GIS in an effort to do more in- house. • Secured ROSS grant for social worker at Dow Towers. • Secured $245,000 TOD grant for sidewalks along Blake Road. Page 4 of 5 • Obtained $40,000 planning grant for the Blake Corridor. • Utilize email whenever possible to save postage and paper. • Working with property managers and the Post Office to save postage on the Blake Rd Corridor newsletter distribution. • Using free software (GIMP) for graphic design rather than purchasing Adobe software. • Sharing GIS software rights with other users rather than buying individual user packages Page 5 of 5 GENERAL GOVERNMENT City of Hopkins Unfunded Mandates Minnesota Government Data Practices Act (M.S.13) - Nearly all government data is to be considered to be "public" under the Minnesota Government Data Practices statutes andpublic access to, and reproduction of this information is required. The costs and fees charged by local - units of government for this data are minimal and limited. Competitive bidding (M.S.471.345 and M.S.429.041) - The uniform municipal contracting law contains extensive regulation of the requirements for the advertising of and bidding on municipal contracts. Valuation and classification notice (M.S. 273.062) - Requires notices for all properties on the tax rolls, not just for those that were reassessed or reclassified that year, requiring the notices to show the market value and classification of the property for both the current and previous year's assessment and authorizing the commissioner to specify the form of the notice for all counties. State sales and MVET on city purchases (M.S. 297A and 297B) - Cities are required to raise, through property taxes or fees, adequate revenue to pay the 6.5 percent sales tax on most city purchases of goods and services. In addition, they must pay the motor vehicle excise tax (MVET) on vehicles such as road maintenance vehicles, plows, dump trucks, etc. PERSONNEL /EMPLOYEE RELATIONS Pay equity, implementation and reporting (M.S. 471.991 -99) - Personnel costs have been increased by the state requirement that cities and other local governments conduct job evaluation studies, report on implementation, and meet equitable compensation standards as defined in state rules. Public pensions - basic and coordinated plans (M.S. 353.27) - Cities are required to participate in the state Public Employee Retirement Association (PERA), that requires city employer contribution rates in 2009 of 6.75% percent for Coordinated plan members. Public pensions - police and fire plan (M.S. 353.65) — Cities are required to participate in the state PERA Police and Fire Plan that requires a city employer contribution rate of 14.10 percent. Continuation of health and life insurance coverage (M.S. 62A.17 and M.S. 61A.092) - Cities must comply with a state requirement to offer continued health and life insurance coverage to former employees following voluntary or involuntary termination. Veterans preference (M.S. 197.447, 455, 46, 48, 481 and 192.26) - Cities are required to give preferential treatment to veterans for hiring, protection from discharge, fully paid leave while challenging any discharge or disciplinary action, and full salary for up to three weeks for all city employees serving in the military reserves or on active duty. Page 1 of 7 Mandatory binding arbitration (M.S. 179A.16, .18) - Employee classes such as peace officers and firefighters are not allowed to strike. Rather, cities are mandated to comply with the compensation and benefit determinations of an appointed arbitrator, even if the elected representatives of the city's residents determine that a strike would be preferable. Continued health insurance for injured public safety officers (M.S. 299A.465) - Cities are required to continue health benefits to police officers and firefighters injured in the line of duty. Initially, the state reimbursed cities for the full costs of complying with this requirement. Since 2003, the state has pro -rated reimbursements to affected cities based on the amount available and the number of eligible applicants. The 2003 law change resulted in significant and unanticipated costs to cities. Workers' Compensation (MS 176) — Cities are responsible for enforcing state requirements for workers' compensation for local contractors and licensees. Prevailing wages paid on public contracts (MS 177.41) — The state's Davis -Bacon requirements (prevailing wage requirements), as interpreted by the Attorney General can increase the cost of city contracts. In addition to state mandates that apply to cities, there are federal mandates which apply to all employers, such as: Family and Medical Leave Act (FMLA) - requires employers to give up to 12 weeks of leave per year for medical issues. Social Security and Medicare - Employer contributions of 6.25% and 1.45% of employee's salary. Drug Testing for employees who have Commercial Driving Licenses. DATA PRACTICES Compliance with new data practice government data classifications - Compliance with new data practice government data classifications such as payroll time sheets or other data that would reveal city of residence of current and former employees, volunteers and independent contractors; data regarding employees of secure treatment facilities and their immediate family members that would reveal where they have received training or attended educational courses if such data would reveal work assignments, home address or phone number, location during non - work hours, or location of immediate family members; nonpublic classification status for preliminary and final market value appraisals of property owned by the city until a purchase agreement has been finalized or appraisals are exchanged; release to domestic abuse victim and victim's attorney of written police report and arrest data related to domestic abuse prosecution; implementation of procedures for closing, tape recording and maintaining recordings of meetings to receive security briefings. (Chapter 290, 2004 Session Laws) Page 2 of 7 ELECTIONS Compliance with federal Help America Vote Act (HAVA) - Cities are required to comply with HAVA voter registration absentee voting, military and overseas voter record reporting procedures as well as with assisted voting equipment requirements. Cities that administer absentee voting are to be open extended hours the day before election. (Chapter 293, 2004 Session Laws) Conducting elections (M.S.205) - State requirements determine when and how cities conduct elections. These laws apply to: regular and special elections; elections for county, state, federal, city and some school races; the timing of the election; publication and posting of 4 the election; the hours that polls must remain open; the number and salaries of election judges; state - certified voting equipment; time lines for testing of voting equipment; preparation of ballots; absentee ballot procedures; and same -day voter registration. POLICE DEPARTMENT Crime Data — Crime data is reported on all Part I and Part II crimes to the FBI via the state in an electronic format they mandate. The officers must collect statistical data on victims not necessary for department crime investigations. Support Services staff must code and submit all crime reports to the state. Estimate 1/3 of statistical data collected for each police report is to satisfy reporting requirements. Estimate of Support Services staff responsible for mandated reporting — Lead Support Services Specialist 40 %; Support Services Specialist Data Entry 80 %. POST Board - The Minnesota Board of Peace Officer Standards and Training (POST) requires each licensed officer to complete continuing education training along with firearms, first aid, use of force and driving training. In the past POST collected and maintained these training records, now each department is required to do collect and maintain these records. The department is subject to audits of records and the Chief can have his peace officer license revoked if the records are not maintained in a proper system. The department had to purchase a computer program to track the many areas of training. The Captain does data entry of training files each week. Jails - Jail size, accommodations, procedures and food are subject to conditions stated by the Minnesota Department of Corrections. The department is audited bi- annually by the Minnesota Department of Corrections to insure compliance. Video monitoring logs, in- custody prisoner check logs, quarterly incident reports, and daily jail inspection logs must be kept and/or submitted daily, monthly, quarterly or yearly as directed. The Administrative Services Director oversees all records and audits. Temporary detention facilities /detoxification centers — City facilities for temporary holding of persons who have been arrested must meet state standards for the building and its maintenance. Data Practice - Support Services Specialist spends 40% of her time reviewing reports for redaction in compliance with Minnesota Data Practices regulations prior to public release. Grant Reporting - Police Services Liaison is responsible for the administration of all grants received. Approximately 10 -15% of her time is spent in processing required reports or requests for reimbursement. Page 3 of 7 The Minnesota Bureau of Criminal Apprehension (BCA) - acts as the governing body regarding the dissemination of data that comes from or goes into state or federal databases. A tri- annual audit is conducted to insure that we are in compliance with all requirements on the entry and dissemination of Hot Files (stolen property and missing person) as well as criminal history records. We are required to keep meticulous records on where this information is disseminated as well as the accurate entry, modification or clearing of Hot Files data. The Administrative Services Director oversees all record keeping and dissemination requests. Homeland Security - The Hopkins Police Departments received a large Homeland Security grant for the 800 MHz radio system and radio equipment in 2001. All of the equipment that was purchased must be tagged and annually inventoried per Federal regulations. Annual audits are conducted by federal, state or county agencies to insure we still have the equipment or, if it has been disposed of properly. BCA Reporting - Monthly validation of outstanding Hot Files is conducted as required by the BCAIFBI. Any stolen item or missing person that has been entered into the NCIC national database must be validated that it is still an active file. Each victim must be contacted via mail or telephone to verify that the item/person is still missing. The Administrative Services Director checks each file, makes the proper contacts and updates each file. This process takes from 5 to 10 hours a week. 911 System - are mandated to maintain the integrity of the 911 database. Whenever a 911 call comes in and the information is incorrect, we must obtain the correct information from the call and submit the corrected information to Intrado. A dispatcher updates these files averaging 1 to 2 hours per week. 911 Requirements — Cities that operate PSAPs face the potential loss of guaranteed and stable stae revenues due to the actions of the 2005 state Legislature that discontinue assurance that the dedication of the existing surcharge on monthly phone bills will be available after 2007 to cover local costs of providing for 911 service. Current surcharge revenues of 20 cents /month paid to city- operated PSAPs cover only a small share of local 911 costs. As a result cities must increasingly rely on local property taxes revenues to cover a large share of the costs of maintenance as well as the technical and operational improvements and system upgrades required to receive and identify the call -back number and location of persons calling for help. FBI /BCA mandates - that all employees, volunteers, custodial staff that have unescorted access to the police area or who have access to various federal /state databases, must be fingerprinted within 6 months of hire. The Administrative Services Director oversees this access, authorizes access to new employees after required checks. A PSO runs the fingerprint checks on each applicant. State /Federal Reporting - The POST Board and the BCA both require various quarterly and annual reports. (e.g. personnel actions, bias crime activity, motor vehicle pursuits, etc.) The Captain and/or Lead Records Technician complete these reports as they come due throughout the year. Fine distribution (MS 357.021) — State law defines the distribution of fine revenues collected from violators of state laws. Although locallaw enforcement costs have risen in recent years, the portion of the fine revenue distributed to cities has not been adjusted. In addition steep increases Page4of7 instate - imposed traffic citation surcharges have resulted in more court challenges to citations and thus increased local prosecution costs. Detention of DWI suspects (MS 169A.40 subd 3) — A peace officer acting without a warrant who has decided to proceed with the prosecution of a person for driving while impaired (DWI) offense shall arrest and take the person into custody, and the person must be detained until the person's first court appearance. 800 mhz requirements - Despite increased reliance on 911 surcharge revenues to finance the cost of state bonds to be sold to continue the build -out of ARMER, the statewide public safety radio communications backbone, only a small portion of that financing is available to aid cities to build subsystems for local public safety communications that will provide interoperable communications with other jurisdictions. To date, the Legislature has not addressed how cities and counties will be able to afford to obtain the means necessary (communications infrastructure improvements and portable and mobile radio equipment) to obtain such coverage. FIRE DEPARTMENT "First responder" and firefighting by city employees on state highways — State reimbursement for these public safety services does not adequately cover the costs of performing these services. PUBLIC WORKS Fees • new fee starting in 2008 is a MN DILHR permit for each city elevator, cost: $500 /year • State mandate for compressed air tank inspections: $100 /year MN Homeland Security - Various fees charged by MN Homeland Security and Emergency Management, Hennepin County and MPCA for hazardous substance generation associated with equipment maintenance: $500 /year + staff time for annual report submittal National Pollution Discharge Elimination System - The Federal and State mandate to comply with the requirements of the National Pollution Discharge Elimination System, (NPDES) Phase II stormwater permit costs the City approximately $25,000 /year in staff time and fees - charged to the storm sewer utility. Drinking Water Sample Testing - State requirements for drinking water sample testing and payment of annual fees cost the City approximately $20,000 per year Confined space entry — State and federal standards are imposed for situations where a confined space (such as a manhole) is entered. For example, there is a requirement that a minimum of two employees are present whenever a confined space is entered (OSHA) Wastewater treatment standards — State requirements exceed those set by the federal government for many standards affecting wastewater treatment. Extensive and complicated reporting requirements are mandated by the PCA. Page 5 of 7 Solid waste management - State law specifies the existence and parameters of local recycling programs, waste collection practices, etc. Surface water management organizations or plan (M.S.103) - Cities are required to participate in the development and costs of a comprehensive water management plan. Minnesota Clean Indoor Air Act (M.S.144.411 -17) - Cities are required to comply with and enforce the act within their public buildings. NPDES Phase II permitting - (Federal Clean Water Act -- MN Rules 7050) Municipal state aid roads (M.S.162.09 and MnDOT rules) - Cities must comply with standards in order to receive reimbursement for funding for construction and maintenance of certain roads. These standards often result in "overbuilding" city streets. Many items, such as full signals, landscaping, pre- engineering, and certain legal costs are not eligible for compensation. Street lighting (M.S.216C.19) - State law requires all new and replacement lighting for street and parking lot lighting to meet energy efficiency standards adopted by the Department of Transportation. Lamps with initial efficiencies of at least 70 lumens per watts, such as high - pressure sodium or metal halide lamps, are required; mercury vapor lamps may not be used. PLANNING AND ECONOMIC DEVELOPMENT Annual tax increment district reporting requirements (M.S. 469.175) - Comprehensive and detailed annual reports of each TIF district are required and they must be provided by cities to County Board(s), County Auditor(s), School Board(s), and the State Auditor. Business subsidy reporting (M.S. 116J.993 -995) - Local governments providing business subsidies or financial assistance are required to submit information to the DEED for two years after the benefit date, or until the goals are met, whichever is later. Comprehensive Land Use Plan (M.S.473H) - Cities in the seven - county metro area are required by the state and the Met Council to have a comprehensive land use plan and update it every 10 years. State zoning standards (M.S. 463.365) - Local zoning decisions for manufactured homes, group homes, earth - sheltered homes, etc., are limited by the state. Metropolitan Council Livable Communities Act — Participation in the act is required to be eligible to compete for funds, but no funds are guaranteed. Participation comes with reporting requirements and an obligation to expend a certain amount of City funds on affordable housing initiatives. Land use planning (M.S.473H) - Cities in the seven - county metro area are required by the State and the Met Council to have a comprehensive land use plan. REVENUE CONSTRAINTS Limitations on local special assessments (M.S.429) - Statutory restrictions are imposed on the uses, notices, hearings, bidding, contracts, apportionment of cost, assessment procedures, and collection of special assessments. Page 6 of 7 Tax exempt property (M.S. 272.02) - Many properties in cities are defined by state statute as exempt from property taxes imposed by the city. The use and nature of these properties frequently increase city costs (police and fire protection, road maintenance, street lighting, etc.). Examples include: state institutions, such as universities, hospitals, corrections facilities, and other state -owned properties. Limitations on maximum penalties and fine (M.S.609.033 -0391 - Statutory restrictions are placed on allowable penalties and fines for ordinance violations, and petty and gross misdemeanors. Truth -in- taxation (M.S.275.065) - State law requires cities to provide pre- notification of property tax changes, newspaper advertisements, multiple special hearings, and compliance with state rules. Cities must certify a proposed levy amount by September 15 and, with few exceptions, are not allowed to increase this amount. Cities must also pay a proportional share of the counties' costs of preparing and mailing parcel specific notices. Page 7 of 7