Council Minutes
PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
June 26, 2006
The city council of the city of Grand Forks, North Dakota met in special session in the council chambers in City Hall on Monday, June 26, 2006 at the hour of 7:00 o’clock p.m. with President Gershman presiding, pursuant to call by Mayor Brown, which was served on all members. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Gershman, Christensen, Kerian, Kreun - 7; absent: none.
President Gershman announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter, and that the meeting is being televised.
ADOPT 2007 BUDGET RESOLUTION
Council Member Hamerlik stated that last week at a working session along with previous working sessions and conversations there was discussion relating to 2007 budget, that a resolution was drawn and suggested that the drafted resolution be read with one word to be included - as a minimum mill reduction and moved that the 2007 budget resolution be approved. Council Member Christensen seconded the motion.
The city auditor read the proposed 2007 resolution
Council Member Glassheim stated he would be opposing the motion and offering a substitute motion, but first would like to speak as strongly as can against taking 2.5 mills from the dike fund, to remind council and public what the City has done over the past seven years to keep its share of the mill rate in control, and propose a budget resolution formula which would establish a general policy of how we are going to treat increases in valuation in the future.
He stated that we have a chance to pay off the dike debt by 2014 if we keep the 2.5 mills, or if reduce the 2.5 mills we would have dike debt until 2022. The 2.5 mill reduction from the debt repayment plan amounts to $11.00 for a $100,000 house per year for 9 years; for the next 11 years of a 20-year period they would be saving $54.00 year; and not a good idea to take 2.5 mills out of debt repayment plan.
He stated over the past 7 years the city general fund (operating budget) has gone from $7.3 million total we collected in property taxes in 1999 to $8.4 million which is what we collected this year, that in 7 years we have increased by $700,000, small amount, that at the beginning 15 mills out of the total that the city collected was going to the dike, and so the operating budget has been paying for that year after year, and time to stop that, and also time we took credit for the low increases in general fund. If you look at the difference between 1999 when the mill levy was 136 total, including airport and library; and in 2006 117 mils, that is a reduction of 18.6 mills; that this council always been concerned to hold the line and to make small changes which wouldn't destroy public safety, public health, etc. that we have been reducing the mills over the past 7 years consistently.
He stated that we should adopt a formula which gives us guidance year after year rather than each year finding some number that we are trying to reach, and proposed that there is a certain amount of money that we get from new construction, not from increased valuation or from existing taxpayers, and that the City keep amount from new construction and that every entity takes account of inflation, and that the city council should take one-half of the rate of inflation for the upper midwest to pay for salary increases at inflationary rates, electricity, gasoline, supplies all increasing by the rate of inflation, but keeping one-half the rate of inflation and the new money that is coming in and make that contract with the public and send them that message so they can know that City won't keep overage from increased valuations. He moved the following resolution: Be it Resolved that the City adopt the following formula in budgeting, that we will use all increased collections due to new construction or new properties coming out of the tax rolls plus a percentage of new income equal to half the amount of the annual consumer price index inflation rate. Council Member Brooks seconded the motion.
Council Member Hamerlik said that at the last working session 6 members were there and agreed, and would have been nice to have had input at that time; that there was nothing in the draft resolution about dike reduction. It was also noted that in Council Member Glassheim's comments and resolution that we are talking only about 24% of property taxes, that we can control that amount and that is what debating.
Council Member Christensen stated this is a budget resolution, that he thinks Council Member Glassheim's ideas are good but totally irresponsible for us to adopt that type of resolution tonight without the new members of this council having the opportunity to participate, that Mr. Brooks has suggested that we need to have planning sessions, the Mayor has suggested at these work sessions that he would like a five-year plan; that this is a resolution and is what we would like to see the administration work towards in the budgeting process, that on Wednesday it was suggested that new money coming from growth or construction would be reserved, and if talk about keeping one-half from inflation, that might work but we made a covenant with our employees when we adopted the pay for performance and need to honor that He stated these are suggestions and we can revisit these items again in the proper setting and proper planning process and if the administration simply can't make 6.5 mills, they can come back to us in August that they can't get it done and if it is a big problem or issue and if feel totally irresponsible to take 2.5 mills out of the dike fund, come back with a suggestion as to 1.5 or 1.75 mills when only talking about a resolution, and doesn't think we should be making policy - suggestions as to future policy are great, have minutes and will follow them up.
There was further discussion as to the proposed resolution by Council Member Glassheim, that if you apply this formula this year it would amount to a mill reduction for the city of 4.7, that we would keep $468,00 of new construction money and keep the inflation rates of 4.1 and keep 2.05% of last year's general fund amount as an inflation factor which would amount to more than what we would need to save more than the administration's proposal of 3.6 and would need to go up to 4.7 in order to keep this formula.
Council Member Kerian stated that the 6.5 mills should be lower, that even the 3.63 that the administration proposes does take all the new money that comes from growth; and the other issue that she is sensitive to is that telling other taxing entities to use the formula because it is up to the voters of those bodies to do that. Council Member Hamerlik stated we are not telling other entities what to do but are recommending to them that they consider this, can't tell them what to do as they have their own budgetary process, and the reason that it is in there that way is to bring some fairness or equity across the whole property tax issue in the budgeting process; that the administration wanted a resolution as much as the council because they wanted to know where we were sitting; that we are only recommending this formula and thinks it is a big jump to make a longer decision with the substitute motion in front of us at this time.
Council Member Christensen stated he shares frustration in budgeting process, that he and Mr. Glassheim sit on the finance committee, and that Mr. Brooks is calling for planning, Mayor's calling for a five-year plan and do as part of their committee on-going monthly report on budgeting process, hitting certain areas and focus suggestions as part of this policy; that it is not a good idea to reduce the 6.5 mills thinking can move up because then we get into micro-managing, that this is the resolution and 6.5 is what we are looking for and if can't deliver it, tell us why and what you've done that makes it impossible to reduce it by 2 mills, which is $250,000 out of a $23 million budget.
There was further discussion from Council Member Kreun who stated we came up with a resolution and rather than putting a formula together, would rather see how the Mayor started this with the five-year plan that they just recognized and see what the staff can put together in their five-year budget to accommodate what we are asking, to have a plan over a long period of time and somewhat of a guideline as a formula.
Council Member Gershman stated that he supports using those funds and that he wanted a 7 mil decrease because he felt the figures he saw would keep the assessment increase neutral, what they are proposing this year is to use new construction money and the excess sales tax plus the dike monies and that keeps it neutral; and the amount of abusive comments that we get as it is always us with the property tax and is getting through to the public that we are 24%, and this is a nudge to the other entities that they would strive to reduce the mills.
Council Member Brooks stated if the resolution passes, would like staff take this resolution and send it to those entities and request that it be put on their agenda at their next meeting indicating that we want to give it to them for their review, purview or whatever else they choose to do with it.
Upon call for the question on the motion by Council Member Glassheim and Brooks, and upon voice vote the following voted "aye": Council Members Brooks, Glassheim - 2; voting "nay": Council Members Hamerlik, Gershman, Christensen, Kerian, Kreun - 5. President Gershman declared the motion failed.
Council Member Kerian stated there is a word in the resolution that is stronger and would like to replace "use" with "consider"; Council Members Hamerlik and Christensen agreed with the friendly amendment.
The city auditor read the motion to approve the resolution with the added wording in the fourth paragraph of mills by a minimum of one-quarter and under the suggested reduction would be suggested minimum reduction of 6.5: Document No. 8943 - Resolution..
Upon call for the original motion and upon voice vote, the following voted "aye": Council Members Brooks, Hamerlik, Gershman, Christensen, Kerian, Kreun - 6; voting "nay": Council Member Glassheim - 1. President Gershman declared the motion carried and the resolution adopted.
ADJOURN
It was moved by Council Member Christensen and seconded by Council Member Kreun that we adjourn. Carried 7 votes affirmative.
Respectfully submitted,
John M. Schmisek
City Auditor
Approved:
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Harold A. Gershman, President of City Council