HomeMy WebLinkAbout20090615 - VIII-C-3MEMORANDUM
TO: Honorable Mayor and City Councilmembers
FROM: Dave Osberg, City Administrator
DATE: June 11, 2009
SUBJECT: Resolution Identifying Budget Reduction Measures
RECOMMENDED CITY COUNCIL ACTION
It is recommended that the City Council take action approving the attached "Resolution of the
Hastings City Council Identifying Budget Measures to Reduce the Current Shortfall in the City's
General Fund and To Amend the 2009 Budget."
BACKGROUND
The City Council has been kept apprised during the recent months of the budget shortfall due to
a reduction in State Aids, declining permit revenues, reduction in investment income and
delinquent property tax receipts. The Finance Committee, consisting of Chair Danna Elling
Schultz and City Councilmembers Tony Alongi and Mike Slavik recently conducted a meeting
on May 28, 2009 to address the current situation. In particular, the Finance Committee has
addressed the need to replenish the General Fund, as it currently falls below the threshold set
previously, which is an amount equal to 40% of the current General Fund budget. The General
Fund must be at a certain level to assure adequate cash flow throughout the year, but also to
illustrate the continued strong financial condition of the City when bond ratings are solicited by
Moody's, each year.
The attached Resolution attempts to address the efforts needed to replenish the General Fund
over the next two years, and to also address the initial planning for the 2010 Budget.
a.) "The General Fund balance shall be targeted at the 35% level by the end of 2009 and at the
40% level by the end of 2010, thus in full compliance with the previously established policy, by
the end of fiscal year 2010. "
The Finance Committee has previously conducted a meeting that included guidance from
the City's financial advisor, Springsted, suggesting the City have a plan to achieve full
compliance with the General Fund balance policy. This provision identifies the goal of
compliance by the end of fiscal year 2010, thus relieving some of the pressure to make up the
entire difference in 2009.
b.) "The 2009 Budget is hereby amended with those changes identified in Resolution #03-08-09
adopted by the City Council on March 16, 2009 implemented, effective upon the adoption of this
Resolution. "
Despite the fact the final un-allotment amounts have yet to be established by Governor
Pawlenty, Staff would recommend implementation of the entire amount identified in the
Resolution, as the entire amount will be needed to assist with the City budget shortfall.
c.) "The 2009 Budget is hereby amended with a reduction in the amount of $180,125 eliminating
certain items remaining in the ERF allocations. "
All items remaining in the ERF allocations are eliminated, but for the $200,000 allocation
included for the future purchase of ladder truck in the Fire Department, as recommended by the
Finance Committee during its meeting on May 28, 2009.
d.) "The 2009 Budget is hereby amended in the amount of $677,317 by reallocating certain
amounts to the General Fund from other Enterprise and Special Revenue Funds as determined
by appropriate by the Finance Department. "
Certain overhead costs and general fund expenses are reallocating to some of the
Enterprise Funds and Special Revenue Funds, to more accurately reflect the expenses in each of
those funds.
e.) "The full time position in the Parks and Recreation Department shall remain vacant. "
Self explanatory.
f.) "City Staff is hereby directed to implement a program that would encourage all City
Employees to voluntarily participate in the program, with an understanding that all City
Employees would furlough 40 hours, between the date of this Resolution and December 31,2009.
Staff is directed to implement such a program providing the most reasonable amount of
flexibility to the City employees, reducing to the greatest extent any possible economic hardship
associated with such a furlough.
While not mandatory, this illustrates the City Council's intent to seek voluntary furlough
hours throughout the balance of the year, to assist with the financial situation, and to make the
program as flexible as possible to assist the employees. Forty hours is the targeted amount all
employees would be expected to furlough.
g.) "City Staff is hereby expected to prepare a report for the City Council to consider within 60
days that would allow for the consideration of the implementation of a street lighting fee. "
While no decision has been made yet on the possible implementation of a street lighting
fee, this provides direction for Staff to research the possibility and report further to the City
Council.
The Resolution also indicates the City Council's expectation that no wage adjustments will be
granted in 2010, except for those associated with a lane change, seniority change or market rate
adjustment.
The Finance ittee is in support of each of these actions outlined in the Resolution, based
on the disc 'on at their meeting on May 28, 2009.
David M. Osberg
City Administratc
RESOLUTION #
Resolution of the Hastings City Council
Identifying Budget Measures to Reduce Current Shortfall in the
City's General Fund and to Amend the 2009 Budget
WHEREAS, In December 2008 the City of Hastings' projected payment from the State
of Minnesota was reduced by $341,000 due to an un-allotment by Governor Pawlenty; and
WHERAS, On Monday March 16, 2009 the Hastings City Council approved a
Resolution Identifying Items Intended for Amendments to the 2009 Budget Due to Reductions in
State Aid from the State of Minnesota; and
WHEREAS, Proposed budget cuts totaling nearly $800,000 were identified in that
Resolution by the City Council, with final implementation dependent on the un-allotment as yet
established by Governor Pawlenty; and
WHEREAS, The loss of State Aid, combined with projected reductions in other City
revenues will likely result in a significant reduction in the City's General Fund, below limits
established by City policy; and
WHEREAS, The City Council hereby seeks to establish a plan to replenish the General
Fund to levels in compliance with the policy, by the end of fiscal year 2010; and
NOW, THEREFORE be it Resolved by the City Council by the City of Hastings on
this 15th Day of June, 2009 as follows:
a.) The General Fund balance shall be targeted at the 35% level by the end of 2009 and at
40% by the end of 2010, thus in full compliance with the previously established policy by
the end of fiscal year 2010.
b.) The 2009 Budget is hereby amended with those changes identified in Resolution #03-08-
09 adopted by the City Council on March 16, 2009 implemented, effective upon the
adoption of this Resolution.
c.) The 2009 Budget is hereby amended with a reduction in the amount of $180,125
eliminated certain items remaining in the ERF allocations.
d.) The 2009 Budget is hereby amended in the amount of $677,317 by reallocating certain
amounts to the General Fund from other Enterprise and Special Revenue Funds as
determined appropriate by the Finance Department Staff.
e.) The full time position in the Parks and Recreation Department shall remain vacant.
f.) City Staff is hereby directed to implement a program that would encourage all City
Employees to voluntarily participate in program, with an understanding that all City
Employees would be expected to furlough 40 hours of between the date of this
Resolution and December 31, 2009. Staff is directed to implement such a program
providing the most reasonable amount of flexibility to the City employees, reducing to
the greatest extent any possible economic hardship associated with such a furlough.
g.) City Staff is hereby directed to prepare a report for the City Council to consider within 60
days that would allow for the consideration of the implementation of a street lighting fee.
Be it Further Resolved, that City Staff is hereby directed to prepare the 2010 Budget
with the expectation that there will be no wage adjustments in the 2010 Budget, except for those
associated with a lane change, change in seniority level or the third year of the market rate
adjustment, as identified in Resolution #12-23-07.
Adopted by the City Council of the City of Hastings, this 15th Day of June, 2009.
Ayes:
Nays:
Paul J. Hicks Melanie Mesko Lee
Mayor City Clerk