DRAFT – These minutes are not official until approved at the next City Council meeting.

City of Bigfork

City Council & Budget Committee Work Session August 22, 2007

Members Present: Mayor Amy Tendrup, Jean Lexvold, Richard Salmi, Linda Koppelmann, Angie Storlie, Amy Pifher and Jon Babcock

Absent: None

Also Present: None

Mayor Tendrup called the work session to order at 6:00 p.m. and began with a line-by-line review of the 2007 General Fund budget to-date. There are a number of line items that are over budget and the fund as a whole is over budget on disbursements, however the fund has received more than expected in revenues as well. One major contributor to both disbursements and receipts being over budget was the airport runway project. The 2007 budget did not include costs or grant revenue for this project. The consensus of the Budget Committee and City Council was that the deficit in the General Fund left from 2006 should not increase in 2007 if the budget stays on track for the remainder of the year.

The focus turned to the proposed 2008 General Fund budget. The Budget Committee presented the numbers they have discussed. The amount budgeted for disbursements is $252,345.26 which is a six percent increase from the 2007 amount of $238,963.00. The non-tax revenue projected for 2008 is $124,929.40. This amount includes Local Government Aid, permit and hall rental fees, State and County aid for the airport, school liaison officer funds, cemetery lot sale revenue, traffic fines, interest earnings and gas tax refunds. This leaves $127,415.86 needed in property tax revenue to balance the budget. By comparison, the 2007 General Fund tax levy was $103,523.87, making this an 18.75% increase from the prior year. Due to the fact that our debt services levies will increase 23.37% in 2008, the overall increase in the levy would be 19.38%. The Committee and Council were in agreement that was too high of an increase and began looking for things to cut from the disbursements or ways to add revenue.

Tendrup suggested setting up a utility for street lights rather than including them in the General Fund budget. She pointed out that by doing this, entities such as the school and hospital that do not pay property taxes would be paying their fair share of the cost of street lights. The specifics of charging for street lights this way was unknown, but Storlie provided a rough estimate that if $3 per month for each parcel within the City limits were collected, it would cover the $11,000 annual cost of the existing street lights. Storlie will obtain sample ordinances regarding street light utilities and present them to the Planning & Zoning Commission for review at their next meeting.

The next cost-saving measure that was discussed was requiring employees to pay 15% of the cost of their health insurance premiums. This was a recommendation from the Personnel Committee and Budget Committees. Tendrup reminded the Council that no formal action on this could be taken until the union status was determined. She recommended budgeting for it this way and proposing this in the union negotiations.

The Committee and Council did not foresee being able to add any additional revenues to the budget. There was discussion on the need to review fees for hall rental, zoning permits and alcoholic beverage licenses. The Planning & Zoning Commission will be directed to conduct a review and the projected revenues for these items were increased slightly.

With these change made, the amount needed from property taxes would be $112,597.56, making an 8.06% increase in the General Fund levy and a 10.39% increase in the overall levy. Storlie pointed out that we have no control over the increase in the debt service levies as they are set by the bond documents. She added that we are making principal and interest payments on the 2004 Cedar Street Water/Sewer project bond which was not the intention. The Council intended on paying off that bond with proceeds from the sale of the city-owned lots on Cedar Street. As the lots have not sold, the City has had to levy for funds to make the bond payments. It was suggested that the lots be advertised at a reduced rate and the proceeds used to pay down and refinance the bond to help decrease the amount of the debt service levy in future years.

The Water and Sewer Fund budgets were discussed next. City Engineer Julie Kennedy of Short Elliott Hendrickson Inc. had provided the Council and Committee with information on the rates as requested. With the budget that has been proposed for 2008, water and sewer rates for the average user would need to increase 71% and 88% respectively. The Committee and Council conceded that this was obviously not realistic. Kennedy had also prepared information on a 3% rate increase which is what the City has tried to stay with for the past several years. If the rates for water and sewer were raised 3% for the average user, $46,568.65 would need to be cut from the proposed water budget and $68,067.09 would need to be cut from the proposed sewer budget. The Committee reported that they had left it to the Council to find some middle ground. After much discussion, the determination was that a 15% increase in water and sewer rates and corresponding cuts to the budgets would be necessary. Pifher calculated a rough estimate of an $8.00 per month increase in the average users bill with this increase. Kennedy will be directed to determine the dollar amount of cuts needed to the budget if rates are raised 15%. The decision made previously to require a 15% employee contribution to health insurance will help reduce the budget somewhat. Public Works Superintendent Chuck Almhjeld will be directed to cut the amount necessary from the water and sewer budgets and present the amended 2008 budget to the Council. Pifher pointed out that even with a 15% increase, the water and sewer rates would not be at the level they need to be at in order to qualify the City for grants/loan through Rural Development (RD). Tendrup noted that we would be looking to RD for funds very soon for the water improvement project and the rates would need to be in line by that time.

Mayor Tendrup adjourned at 7:18 p.m.

Angie Storlie

City Clerk/Treasurer