City Council - workshop

to you. All right, call the meeting to order for the workshop. Roll call, please.

Council Member Nordby's absent. Council Member Woods? Here. Council Member McKenzie? Here. Council Member Schwerer's absent. Mayor Monge?

Here. Thank you very much. Can I get a motion to adopt the agenda, please? So moved. So moved. Council Member McKenzie? Second. Second. Council Member Woods? All those in favor, say aye. Aye. Aye. Thank you very much. Off to the Dan show. One topic on... Oh, I'm sorry. We're going to go to this first.

We've got the 2027 levy slash general fund budgets tonight. Dan put together a really nice report for you and turned it over to Dan Winnick, our finance director.

Well, thank you, Mayor, Council Members, and City Manager. This is the City Manager's budget based upon the direction that we received from City Council, and the City Manager voiced that to all of our department heads. A lot of work has gone into this already. All of the department heads have submitted their budgets. They have all had meetings with Brian and myself. I think I've mentioned this to a couple of people I think the mayors won and also mentioned this to department heads. Brian's education on the budget has grown tremendously. He was asking questions and sees the whole entire picture so clearly was actually put a big smile on my face. He has done one heck of a great job of his understanding of all the ins and outs. regarding the budget. Tonight we're gonna have the budget kick off and we're gonna go over budgets that have a levy impact. So what that means is when we get together in August 18th, we will discuss the enterprise funds, internal service funds, and then the capital improvement plan that we have, the 10-year plan. Tonight we're going to be covering the levy budgets, which include the biggest one is the general fund, And then we have three funds that are impacted with levy because of our infrastructural components that we have made a big goal in levying for, being the parks, asset preservation, which are our facilities, and street maintenance, which are our roads. And then in addition to that, we have the HRA and the EDA budgets. All of those together are all the levy budgets. So tonight we're gonna go over a little bit of fiscal information. We're gonna review the levy budgets, look at what we're proposing with city managers proposing for the 2027 proposed levy, proposed general fund budget, the HRA and the EDA budgets, and then those three infrastructural budgets. And then open it up for discussion, any questions, answers, what other additional information you may need. for you to make a decision. Remember, in September, we need to certify our maximum levy. Means we can come down before we do a final approval of the levy in December, but we can't go up. So with that, kind of walk through and give a little bit of fiscal information. It was last year's budget. We talked about the state of Minnesota and where they were at and some of the concerns that were out there. At that point in time, if you remember, they were looking at for the biennium of you know, the 28, 29, that there were going to be, you know, like $6 billion deficit. Things have changed drastically. And you can see right now the, you know, the forecast is showing a surplus that, you know, as of March 2nd, OF THIS YEAR, THE STATE'S FINANCIAL OUTLOOK IMPROVED 1.3 BILLION SINCE NOVEMBER, BUT OFFICIALS WARN OF A STRUCTURAL DEFICIT IN FUTURE BUDGET CYCLES, BUT THEY'RE LOOKING RIGHT NOW AT A SURPLUS OF ABOUT $3.7 MILLION. AGAIN, SO MUCH IS DEPENDENT ON HOW THE ELECTION FOR GOVERNOR AND SO FORTH in the legislation in the Senate for Minnesota and how the impact of that takes place. But if you remember last year with those big deficits, we kind of looked at one of the, you know, I always hate this term, low-hanging fruit for a state to be able to reduce, and that's local government aid. And we have a dependency on local government aid. You know, we get about $1.6 million in local government aid you turn that $1.6 million into a levy increase, which would have to go out to the taxpayers, and all of a sudden you're looking at about a 20% levy increase to be able to cover that type of deficit if they were to wipe everything out. But right now nothing has changed with that in this past legislation, so we're still at that $1.6 million mark. When we look at our own, I shared a little of this information after the presentation with the financial statements, and I purposefully have done this. I'm looking at both of these levy funds, both looking at it from fund balance and cash and investments. I like the cash and investments more than I like the fund balance because the fund balance has some other journal entries and some other components that are put into it that they'll show assets, they'll show other components to it that really kind of impact position of where they're at. Cash is cash. You got the cash on hand. And I purposefully took it from the beginning of 2023 to the end of the last audit period of 2025. The reason being is that we have a city council board here that three of the members have been here starting in 2023. THEY DESERVE A LOT OF CREDIT WITH THE ADDITION OF THE TWO NEW COUNCIL MEMBERS THAT WE HAVE NOW BECAUSE I'M GOING TO SHOW YOU SOME OF THE ACCOMPLISHMENTS, AND I BELIEVE THEY'RE BIG ACCOMPLISHMENTS FOR THE CITY THAT HAVE TRANSPIRED IN THAT TIME SINCE 2023. YOU CAN SEE WHERE IF WE LOOK AT OUR CASH, OUR GENERAL FUND HAS INCREASED 50% IN THAT TIME PERIOD. HRA is over 100%. EDA is 56%. Asset preservation, 3%. The park capital, 55%. And street maintenance fund, 94%. We have really done what the city council has asked. And that is to levy to try to move us into a cash basis where we can afford to do more street work. If you remember, it's this city council that made the decision to add in that alternate year of non-bonding for street work to put in a pavement preservation program where we're spending over $2 million a year to be able to take care of our streets. Those are huge, huge, huge things. I just took some just capital highlights, and these numbers come from what we actually book into our fixed asset system. And so from 23 to 25, you can see that there was a housing park improvement, polar park, playground equipment. You have the 24, the 25, pavement preservation. You've got the 20, 25, street and utility project, which was a bonded project. We got a well roof, electric infrastructure. Look at all of the equipment that we have put in. We had a lot of aging vehicles. We've really brought our stock up to where it needs to be, all due to the city council's support. Some of the highlights that I really like to look at when we look back over the past three years is that in addition to these expenditures in the four years, is that we have built a very comprehensive capital improvement plan that really was non-existent before the city council. uh... in the past three years and i do have a a chart that later on i'll show you that we really have aggressively began to fund that infrastructure again paying things in cash versus debt debt debt uh... remember i've said this a few times you go out and bond FOR $1 MILLION OVER 20 YEARS AT A 5% INTEREST, YOU'RE GOING TO BE MAKING A PRINCIPAL PAYMENT OF $80,000 A YEAR. THAT'S $1.6 MILLION THAT YOU'RE GOING TO PAY OVER THOSE 20 YEARS VERSUS THE $1 MILLION THAT YOU GOT. SO AS WE MOVE OURSELVES INTO A BETTER FINANCIAL POSITION, AND I THINK YOU CAN SEE AND YOU SAW IN THE YEAR END FINANCIAL AUDIT REPORT CAME IN THAT WE HAVE REALLY SERIOUSLY IMPROVED OUR FINANCIAL OUR POSITION, OUR FUND BALANCE POSITION, OUR CASH POSITION. YOU KNOW, WE MOVED OUR FUND BALANCE POLICY, ESPECIALLY IN THE GENERAL FUND, FROM 35% TO 50%. AT THE END OF LAST YEAR WE WERE AT 67%. THAT'S SIGNIFICANT. And what did it translate to? It translated to us getting a better bond rating, moving from a AA to a AA+. And you've heard me say, for a small city this size carrying the amount of debt that we're carrying, that is really an astronomical thing. accomplishment that we did why because we have done such a great job of planning that you've directed the city manager city managers directed me to take that lead into making sure that we're doing a better job of planning and our department heads have done a fabulous job. They're all on board, and we've just continued to just ride that movement and trying to make it. I know how we got there. To coin a phrase that was said by our mayor, show me the good, the bad, and the ugly. And that's what we did. We showed some of those components that maybe just from a pure financial sense didn't don't, you know, didn't make sense. You know, not trying to get into things that may be controversial. There's always the components that would be nice to have. But, you know, it's kind of one of the bigger ones that just occurred this year, again, underneath this city council. and the hard work that our city manager put into trying to make it accomplished, of getting that grant shifted from one purpose to our water tower. Those are huge. They're controversial, absolutely, but they help us in a different financial percentage. And when we get into the enterprise funds on August 18th, The preliminary look from last year, I just kind of made the adjustment. We were talking about that we were going to end up having some significant increases in rates across the board in our utilities with the exception of the electric rate. In the water, we were looking at probably about 6.25% rate increases for the next 10 years. We're now, because of that move, we're looking at more of a 2.5%. SO THERE'S SOME SIGNIFICANT CHANGES THAT HAVE OCCURRED UNDERNEATH THE LEADERSHIP OF THE CITY COUNCIL. THIS IS FOR THREE OF THE MEMBERS HERE, COUNCIL MEMBER SCHWIER AND MAYOR MUNGEE AND COUNCIL MEMBER NORDBYE, THIS IS YOUR FOURTH BUDGET YEAR. FOR COUNCIL MEMBER WOODS AND COUNCIL MEMBER MCKENZIE, THIS IS YOUR SECOND BUDGET YEAR TO IT. You're hearing me kind of reminisce. As I get older, I reminisce a little bit more and bring some of these points up. Earlier this year, or earlier this month, I have made it five years in this wonderful city of North St. Paul and being your finance director. I love this place. Your leadership has been fantastic. And we listen to everything that you're saying to us in trying to make the city a better place from a financial position and from a budgetary position. So there's a lot of great things that have been accomplished in the past three years as we're moving into the fourth year underneath this city council. City of North St. Paul, you know, we're seeing for the first time all the way since 2018 that the market values are actually decreasing. We're seeing that the overall estimated market values are decreasing. We're also seeing the median value home decreasing. It's decreasing from 310,000 to 307. There's a lot of speculation out there in the market that we're going to see housing prices drop even further in the years ahead as kind of a balance with the interest rates that are out there to make home ownership affordable. That's kind of how the whole economy kind of works. We wrote some very high increases as far as market value is concerned since the COVID time. We're now seeing that it started to flatten out. Now it's starting to go down in the opposite way. What that means is that As those decrease and we levy higher amounts, that puts that much more of a burden on the taxpayers. And again, because our pool is over 90% residential and only less than 10% on commercial, it puts more of a burden on the homeowners that are in this city. The levy budgets that we're going to be, I mentioned earlier, that we're going to be looking at are the general fund. And that houses and the budgets that are underneath that are really basically for all of our basic services. Then we have the Housing Redevelopment Authority, HRA, the Economic Development Authority, EDA, the Park Fund, the Street Maintenance Fund, and the Asset Preservation Fund. Well, we listened to you. The target that we were going at from the direction from city council and the city manager was to bring in a 6% levy increase. The budget that we're going to show you tonight achieves that. And it continues to fund the infrastructure, meaning the streets, the facilities, and the parks, per our plan. The proposed levy, we're seeing, when we look at it, the general fund levy is going up about $176,000. The street maintenance, 173. Park, 76. Asset preservation, 142. Debt's going down a little bit from last year, about $11,000. And again, the debt is set each and every single time when we go and issue bonds. We get what our debt payments are going to be. And this just shows what we need to levy, and we need to levy 105% of what our payments are going to be. So we collect the money in 2027 to make those payments in 2028. Because the first, the bond and principal payment in the beginning of the year is February 1st, and then there's an interest-only payment that's due on August 1st. And you can see the shifts, the differences from the 2026 final levy to the 2027 of where we're at today. And overall, it accomplishes the 6%. What you are going to see here is to be able to accomplish this, we would have to reduce the levy in the EDA by $40,000. So it would go, the EDA levy would go from almost 201,000 to 161,000. The city manager and myself believe that that's very possible and feasible because I'm going to bring you back over to here. And if we look at how the EDA has done, you've seen the fund balance since 2023 to the end of 2025 has increased almost $250,000 or 54%. Cash on the EDA has increased $234,000 or 56%. The levy at $160,000 for EDA will cover what we know of as definite expenses and then some extra. It has been growing every year. And so I think we both believe that there was enough that we could cut that back a little bit and still be able to provide all of the services that the Economic Development Authority needs. But again, those are questions that you certainly can ask or direction that you want to give to us. But that's how we 6%. If we look at the levy changes for 2027, personnel costs, again, are the biggest driving factor in the general fund. almost $245,000 increase or a 2.84% levy increase. In the 2027, this represents the third year of a three-year contract. So we know that the cost of living increase is a 3%. So if you look at all of that plus changes, we make estimates for health insurances, Their step increases and so forth. Coming in at 2.84 is very good. There are no new FTEs positions being proposed in this budget. If we look at the supplies of contractual services and capital, there's a slight decrease. It's only amounts to about 48,000 or about a half a percent levy decrease. Transfers, there's a little slight increase of about 10,000. And all other revenue, we have an increase of about 30,000. The general fund increase overall is about a 2%. And then we have our infrastructural components, streets, parks, asset preservation, and then debts, a little bit of a decrease. Those amount to collectively 4.4%. And then if we took that decrease of the 40,000 from the EDA, we come up to a total of a 6% levy increase. I'm going to stop right there. That's a lot of information that I've just kind of gone through. Is there any questions with kind of our methodology of how we're going about achieving a 6%?

I guess I like to challenge the $40,000 cut from the EDA and what the EDA has, what their goals are and what their plans are. I understand that there is capital money there, to take money away from the EDA that's supposed to help develop our city, whether it's beautification, bringing new businesses in. $40,000 seems like a lot of money to cut from a budget that could be utilized. So I would want to know what the goals are of the EDA. was it discussed to cut? Besides between you and Brian, was it discussed amongst EDA to cut those dollars?

That definitely still has to occur to talk to the EDA. It's not a cut in the budget per se, and we'll get to look at their budget. Their budget is still being set at basically what they've had year after year, but their fund balance has been growing, growing, and growing. So really what that gives it you know an indication is that they really haven't needed to levy that many dollars It isn't a cutting down.

I apologize. I shouldn't have said cut Obviously we're not cutting. We're just reduce not reducing the amount that we would give them This year, but in 2027 excuse me but I would want I would challenge and I would want to know what the what EDA has planned because I that $40,000 that we're reducing essentially is, they're not going to be able to utilize that obviously for next year. So if we have money sitting there for EDA, what is EDA's goal with those dollars? I know that they've done some beautification between windows, roofing downtown, but what else are we going to do with that?

No, very good question.

Yeah, so the facade improvement program that you're referring to is the funding that we've made available for the businesses, whether or not it's, it was focused more towards the facade, like the windows and the doors and what kind of improvements they can make even for saving energy and costs that way. We did the parking lot for the downtown as well. and we have talked about ways of even improving the facade improvement program with, well, which we did, a couple of ways. Initially, you had to spend at least $20,000. First, we reimbursed the $10,000. That was reduced, it was cut in half, so we could have more involvement of it with people doing the improvements. We have floated some ideas. We wanted to see how that took off first to see if we were gonna have more people involved in the program, but potentially moving it on even further than the facade part. It's one of the things we've talked about. It hasn't been implemented, but rooftop units or AC or boilers or heaters or things like that that we can make improvements, because a lot of these are really small local businesses that can't afford some of those bigger high dollar items.

and i will say the antique shop the the popular one i like to think um that's beautiful the windows and that changes that brought a lot of life to that building um so i do i think that's great i would like to challenge though what what are we going to do to draw in our resident new residents um drawing new businesses um that's what some of these dollars are for as well

Indeed. Yeah, and there's other ideas that are out there. We've talked with different firms about economic development and ways to improve. We did...

I mean, we don't have to talk about what we did. It's more or less. We're cutting $40,000 from the EDA to bring this levy down. That's all.

And I guess I would reemphasize that their current funding at the end of 2020.

Decreasing, not cutting. Let me.

Right. That their fund was at over $700,000. So it wasn't like a major blow to it, to us to reach the goal that council had set to try to get to that 6%. So it seemed like a low-hanging fruit, if you will, to get us there and that the fund itself wasn't hurting.

Sure. I rebut that to if we're going to decrease that amount, what if we need that amount moving forward in the next couple years and we don't have those dollars? There have been things that have happened with past councils where we wouldn't have a levy and then we saw damage to what now is catch up to that. So it's one of those situations that we, Proceed with caution.

Yeah, and this is a one-time thing. It's not meant to be done year after year. We'll reanalyze the fund again next year and then see what the best path forward is.

No, I think you make a very good point, and again, this has not gone in front of the EDA at this point in time, and so they may have objections to it, too. I am going to just jump way ahead here, just because you have brought up that excellent question to it. So, you know... IF YOU LOOK AT THE EDA BUDGET, AND I'M BEING VERY AGGRESSIVE TO IT, AND YOU CAN SEE, SO THE PERSONNEL SERVICES, THEY ARE WHAT THEY ARE. WE HAVE REDUCED, PER OUR AGREEMENT WE'VE HAD WITH THE EDA, REDUCING THE PERCENTAGE OF THE ECONOMIC DEVELOPMENT, OR THE COMMUNITY DEVELOPMENT DIRECTOR'S TIME FROM WHERE IT WAS AT. I THINK IT'S NOW DOWN TO WHAT WE AGREED TO, I THINK 20%. But you can see we've got $105,000 in the budget for contractual services. And we look at the actuals from 23, 24, and 25, you're going to see $9,000, $2,600, and $2,600 is all that's been spent out of there, where we're seeing that the net position increased $72,000, $81,000, $94,000. So just based upon that, again, and it does not, doesn't address, I think, the more principle piece that, Council Member Schwerer, that you were bringing up is what is that plan? And if you have that plan and it has a higher dollar amount to it and you're doing this reduction of 40,000, you're working against yourself. And so that's really where that discussion with the EDA really does take place. BECAUSE YOU'RE ABSOLUTELY RIGHT, IF THE PLAN IS CALLING FOR IN THE FUTURE YEARS MUCH HIGHER, THEN YOU DON'T CRIPPLE YOURSELF NOW AT THIS POINT IN TIME. SO, POINT VERY WELL TAKEN. BUT WE WERE LOOKING AT IT FROM THE STANDPOINT OF WHAT WE KNOW AS THIS POINT IN TIME. IT SEEMED TO BE OKAY TO DO. AND JUST LIKE CITY MANAGER SAID, TO BE RE-EVALUATED ON AN ANNUAL BASIS. But again, this does need to go in front of the EDA to make sure that they are in agreement with that. And then showing what our debt levy will be for 27 versus what it is for 26. And you can see there's slight changes that have occurred with that. And again, those are based upon the bond schedules. Some go up a little bit and some go down. They try to make... The payment's pretty equal. You know, they usually try to make them within, you know, a $5,000 or even dollar amount. So then when you multiply it by the 1.5%, you know, it kind of comes up. But unless you're issuing another bond, a debt, or one falls off, it doesn't usually change a great deal. So you can see that there's a slight savings, not a lot into it. And this is kind of the graph that I was referring to earlier. That is really quite impressive, taking from the standpoint that we were given the direction that, you know, build a comprehensive capital plan, identify what needs are in the city, and we saw those needs that are really the streets, the parks, and the facilities, and how do we fund those as we move forward and making sure that we're, you know, we're doing an adequate job of that. And what you see in the blue is what has been levied. So basically, prior to the payable year of 2023, there was no money going into the streets, parks, and facilities from a pure levy standpoint. That has changed over time. And that's based upon those 10-year financial plans, based upon the capital improvement plan, and trying to fund those as we're moving forward. This 27 budget shows that it's now moved up to a total of $1.8 million that's going to streets, parks, and facilities, just per our capital improvement plan that we have had. So, if you look at from, you know, there's three members again that began in 2023. So, you look at that pay 24 number and you look at that for the basic services that the city provides. In other words, administration, finance, police, fire. You had a levy of a little over $7 million. You're up to 7.3. So... really over a four-year period of only going up $300,000 in your levy for providing those services is quite good. I think if we look at that, that's probably less than a percent increase on an annual basis. So pretty impressive. What the burden has been to the taxpayers in the levy has been what we've been putting into the streets, parks, and facilities. And you've heard me say it over and over again that that's what's so important when we look at that capital improvement plan because that's really what's driving the levy at this point in time and to make sure that we're in a good position as we move forward. And we have. Our road ratings have increased. We're starting to take care of the parks. We still have a lot of work there to do. We've had older facilities that are 20 plus years. Money wasn't allocated to that. We're trying to take care of all of those. So You know I give a lot of thanks to City Council for giving us that direction and moving us forward in that way And I think this this graph really does illustrate that there's been a lot of work. That's been been done In the you know past you know since three of these members here on the City Council have taken over When we look at the general fund budget we know kind of look at again the revenue categories and And again, this is really, it does, it emphasizes, it hasn't changed much from year after year, but it really keeps saying that look at our dependency on property taxes is 58%, intergovernmental revenue 21%. So, you know, we're looking at almost 80% of our revenue is coming from you know, property taxes and state funding. That's a heavy reliance. You know, we don't have that other funding source that's out there in our general fund. And if you look at our expenditures, you know, if we look at it by category, it's our personnel costs in the general fund that are really driving it. That's 70% of the budget is personnel costs. And then here's the numbers that kind of back it up that you can see if you wanna look at the numbers and see how they've changed from one year to the next. And then if we look at expenditures by department, you're gonna see that our police is at a little over 47, our fire and code enforcement is 16%. So right there we're over 63% of our general fund is in public safety. And that's not out of line what you're going to see with other jurisdictions that provide both police and fire services. And then followed by the next one after that is our street maintenance, which is almost 12%. But again, you're seeing on the revenue side heavy dependence on property taxes, intergovernmental revenue, and you're seeing on the expenditure side where two things. One, OUR BIGGEST COST IN THE GENERAL FUND IS PERSONNEL BY A LONG SHOT. AND THEN WE REALLY HAVE THAT PUBLIC SAFETY AND THEN THE STREET MAINTENANCE. AGAIN, ALL IN LINE WITH WHAT YOU WOULD SEE IN OTHER CITIES AND MUNICIPALITIES. AND HERE'S THE NUMBERS THAT KIND OF BACK THAT COMPONENT UP. HRA, if we go back and I'll pull back all the way to the front part and again, this is kind of looking at it in the same way as we did with the EDA. Would we increase the EDAs or the HRAs levy from 11,000? You know, it would be a question, do we even need that $11,000 is legitimate because you can see that the fund balance has increased from 23 to end of 2025, a little over $200,000. You see cash has increased $584,000. Um, so again, um, you look at this and, and what are you doing in your HRA? Um, you know, the student built, um, housing is, uh, the biggest component of that, um, which isn't requiring a great deal of money. Um, and, um, at least in the past couple of sales, we've actually made a profit. So it hasn't been drawing it down. So there's really not a need to increase that $11,000. It does go to maybe you can reduce that to zero if you so desire. And so we looked at the EDA in the same manner, and that's where we just made the decision of, Again, it's not a final decision because City Council has that final decision. But that's where we had proposed to reduce it by $40,000. And then you can see the budgets that are prepared for both the HRA and the EDA budgets. And then we have the infrastructural budgets here for park funding. The capital has not been infused into these at this point in time, because department heads had just gotten together last week. We still need a little bit of information from our engineer regarding some street projects so we can finalize the CIP for a proposed CIP that we'll end up bringing back to you on August 18th. And then they'll be pulled into all of these budgets and then you'll be able to see what the impact is and then with the 10-year financial plans. And it doesn't impact the general fund, but it will impact the park fund, the street maintenance fund, and the asset preservation fund, because they're heavily driven by the capital improvement plan. But I also have provided here at this point in time what at the end of last year was the fund balance in the park fund, $830,000. What's the projection right now based upon this information? And then the street maintenance fund was over $4 million. With the projection here, it would remain about that, about 4.1. Asset preservation would, based upon the capital components that we had at the time, still it was being discussed and worked with the department heads, which will be, again, shown later. That one decreases from about 1.7 to about $670,000. So those are all of the budgets that impact the levy. And we really want to open it up and get all of your thoughts, concerns. We've already had a very good dialogue on the EDA, very good points. So we'd like to continue that. If you have questions, what addition would you like to see regarding these levy budgets? Again, on August 18th, you'll see the remaining budgets that we put together, enterprise internal service fund, we have just a couple of special funds, and then the CIP. Questions, thoughts? Are we close?

This is a great framework, I think, to begin with, so I know that's where we started with, was just to throw ideas out, so I do like the framework to start with on this, so... I see a lot of effort and a lot of time has been put into this, so I appreciate it.

I'll agree with Mayor on that. I think you guys do with the fact that we discussed this as a council, what was it, a couple years ago that we just said, I don't think we need to have a billion meetings regarding the budget and we can put Brian and Dan and the department heads together and we can start on that piece instead of starting early in June. I appreciate that. So yeah, I'll ditto what the Mayor said on that. As we're talking about the HRA, I would like to see that those dollars stay there and to keep those dollars and not reduce it for 2027. There's opportunities that may arise in the city that for example, purchasing of a house that we could, or land that we could essentially build a new student build on. You don't know when those opportunities are gonna come up, and when they do come up and we don't have the dollars or the funding there to purchase it, we may be missing out on something that could be pretty hot for us. So I would like to say either we continue to keep that amount the same, or something tight to it, if there is a little decrease or a little increase, I am in favor of both of those, but we still should continue to build on that HRA. Most especially if we're using these funds for some staffing. I'm hard pressed to reduce dollars if we're using these funds as well. And I know it's not a ton of money out of these funds, obviously, but if we are, I would like to see that those remain intact because the last thing we want to do is reduce staffing that we're already tight on here in the city.

In the last two years, it's been a little bit of a skew for the HRA because we've had existing property. We haven't had to go purchase it. So I think that's part of our number two is we didn't have the initial purchase of something. We were able to reuse some of the land we had. So I think that's given us a little bit more cushion than we normally would have had to.

No, good points. Very good points. Yeah.

I think we should keep the budget the same as for the HRA also. We don't want to miss out on any possible properties that we can obtain. THAT STUDENT BUILT HOUSING IS VERY IMPORTANT TO THE CITY.

ABSOLUTELY.

Dan, what does that 40,000 represent in a percentage? If you were to put that $40,000, you're gonna reduce it back into the levy budget.

Is a levy percentage? Yeah. About a half a percent? So you would go from six to six and a half? AND AGAIN, THE DIRECTION, I MEAN, COUNCILMEMBER SCHWIER MADE SOME EXCELLENT POINTS. AGAIN, THIS IS THE PROPOSED. THIS IS TO GET THE DIALOGUE GOING. SO IF YOU SAY, AND WE HEAR CLEARLY THAT, YOU KNOW, WE REALLY DON'T WANT TO REDUCE IT TO $40,000. That our options then are we either raise a levy half a percent or you direct the city manager and staff to come back and try to find ways to get that other $40,000 to get back to that 6%. You know, that's how we do it. know we certainly we we certainly want to be able to be you know trying to get to where the city council wants um and so that means we go back to the drawing board and try to come up with either increasing in revenue um reductions in expenditures whatever to try to get ourselves back to that um you know that six percent and

Well, and I should, I think it's important for the community to understand that as we all got together in the beginning of the year, it was a common agreement that we wanted to stay that as a council to stay at the 6%, roughly around the 6%. So this is the first round. This was where the two of you and the department had saw fit right now. And clearly this is just the beginning.

Absolutely, yeah. So I will throw it out there. I think you are providing staff with direction to not use the $40,000 from the EDA and try to come up with some other options to get us back to that 6%.

I would like to say that I would like to see not all of the money come from EDA and that we're decreasing it from other areas as well.

Okay. Okay.

That's a very fair way of doing it. Yeah, I like that. All right. Yeah, we'll certainly look at it that way.

And I would say you two are best suited for being able to make that decision because one of the limitations that we have is we don't see what the proposals are from all these departments and everything. to know exactly what the plan is with this budget. For us to say we're gonna cut $40,000 from EDA or from parks or something like that, we don't know what the impact to their plans are necessarily. We know monetarily, but we don't know in terms of what the plan is. So it's hard for us to just arbitrarily say, oh yeah, take it from there or take it from there.

No, and that's where what, and again, Council Member Schwerer said it perfectly. She's not suggesting that there's a direct place that we're taking. She's leaving that up to staff that's in a better position to be able to do that. What's being said is that let's not take all $40,000 from the EDA. Let's have this kind of a shared piece. So in other words, we may be able to increase some revenues in our general fund. Let's take a conversation, $10,000. Maybe we can reduce expenditures $10,000. So now we've got $20,000. Maybe we can get $10,000 somewhere else and there's $10,000 that comes from the EDA. and it's kind of a shared piece to it, but we would be making that recommendation to you for your final acceptance onto it. But I think it's pretty clear that we did earlier in the year and that's the direction that we walked into preparation for this budget with our department heads is that we were gonna get this to 6%. And so this was, just like you said, it's the beginning. And that's where we thought, oh, you know, if we look at our fund balance and the history and how things have gone, we're not seeing, we're seeing in the past three years, it keeps increasing, keeps increasing, all by more than $40,000. Hey, we could probably take that $40,000 from there. But on the flip side to it, there's an excellent point that's made, and it was discussed on the HRA website, what happens if that opportunity comes up and you shortchange yourself in the years past? And I think that's a very good comment because I'm gonna tie it into, that's what started us all in showing the piece to it. Isn't that really, at the end of the day, what started this whole entire thing of moving ourselves to being able to pay some cash and start taking care of things Show the good, the bad, and the ugly, building that comprehensive plan. So your point is what we've already done. So let's not go the opposite way with it and hurt ourselves in the EDA. So absolutely, again, I'm getting older. I pull the things together, and so to me that absolutely makes sense. But there's not take it from here, take it from there. That will be us to propose to you.

on the EDA when we got together as a group and discuss what it looked like, the interest rates doubled in how many months. And we had interest on the one across the way here on Margaret and there was three of them and then boom, everybody disappeared at once. So as far as the EDA, we're looking at doing more along the lines, put a little bit of a holding pattern for new and just take care of the things we are. So there's gonna be stuff coming. It's just what's the cycle going out there right now when it comes to building and commercial space and things like that, so.

Dan, if you could help me, I just want to make sure I understand something. When the city puts forth their levy budget, the number you give the state is actually a dollar figure, not a percentage, correct? Correct. Last year, with the percentage we gave, how much... of that percentage actually went to the resident versus, and how much because of fiscal disparity did we save compared to where we said we needed to be?

No, very good. So it's not the percentage, it's the levy amount. So if we're, if we add these all up, we're probably about a $9.1 million levy. That's what we certify. I think we're at about a 1.3 million that we get from fiscal disparities. So for the taxpayers, you take that 9.1, subtract the 1.3, so you're looking at 7.8 million is what they're actually paying for. The 1.3 comes from the fiscal disparities pool that includes, is really generated off of commercial property growth since 1971 for the metro area. So yes, absolutely. They're not paying the full amount, not City of North St. Paul taxpayers.

So, I'm gonna have to email you.

My thoughts are. So one of the things that we have to be conscientious of is that we can't go through a huge, because in the fiscal disparities pool, we're a winner. WE GET MONEY. YOU CONTRIBUTE PART AND THEN YOU GET MONEY BACK. WE END UP BEING POSITIVE ABOUT THE $1.3 MILLION, WHICH HAS GROWN. AND PART OF IT GROWS IS IF THE COMMERCIAL VALUES ARE GOING UP HIGHER AROUND THE REGION VERSUS WHAT OUR POOL IS, AND OUR POOL IS VERY SMALL, that you can increase from that, plus it's multiplied by your prior year's tax rate, because it's the net tax capacity that gets shifted over, that gets multiplied by your tax rate. So you don't want to drastically drop your tax rate down, So you want to, and that's one of the pieces that we show every single year. We're just a little bit too early for that. Usually in August we start to get information from other cities of where their proposed levies are. But we want to be somewhere close to where they are. We don't want to be way low because then it ends up, doesn't hurt us that year, but it hurts us in the subsequent year with the fiscal disparities that can turn. So then it puts more of a burden, even though we would end up having not a high levy increase, it could have a higher property tax impact on our residents because we didn't get as much fiscal disparity dollars, which then translates that more of the burden of the levy goes to them.

And that happened one year for us, was it, that we got that because it was a zero percent? Yes, yeah. Negative a million something the following year?

Right.

And if I remember from last year, when we ended up with the levy, we were gonna be kind of just either floating right above or just below the next three years out.

Yeah, we've been, with the exception of one year, we've been right in the middle range in comparison to cities that are in Ramsey County. So I think we've been very conscientious about that. We haven't gone, YOU KNOW, WILD. AND THAT'S WHAT TO ME IS QUITE IMPRESSIVE, AGAIN, IN THIS GRAPH ILLUSTRATES IT. YOU'VE DONE THAT, YET YOU'VE PUT OF YOUR LEVY INCREASES, 1.8 HAS GONE TO HELP YOUR NEEDED INFRASTRUCTURAL NEEDS IN CASH. AND FOR YOUR BASIC SERVICES, YOU'VE ONLY INCREASED $250,000. That's that's remarkable To me what it means is that your department heads are continuously tightening up their belts and their budgets That is impressive when we're doing that we're still getting the new equipment everything we need to so that is a win-win on both ends of it Other questions, thoughts, additional information that you would like to see come forth?

No, I think you've explained everything very well as always, Dan.

So we will come up with some options that we will present on the 18th in addition to the internal service fund, the enterprise funds, and the CIP. And again, any questions that you have in the interim time, if you want to reach out to the city manager so we can be prepared on the 18th to be able to answer them, please don't hesitate.

Okay.

But again, it has been and it continues to be a pleasure to serve you. You know, love being here in the city and as your finance director. And I give you so much kudos for putting us in a very good financial position as we move into the future. And, you know, hopefully this 6% that, you know, it's in line with what, you know, City Council's direction was. So we'll do our darndest to bring it in there without having it all come out of the EDA.

Thank you. All right.

Anything else from anybody? Are you good? Okay.

All right.

Thank you very much. Really appreciate you and the staff and all the hard work.

Thank you.

Thanks, Dan. Thank you.

All right, that's it. So we got, it's 6.08, so we got till 6.30. Can I ask for adjournment, please?

So moved.

So moved. Council Member Woods?

Second.

Second. Council Member McKenzie, all those in favor say aye. Aye. See everybody at 6.30.