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PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
September 28, 1998

The city council of the city of Grand Forks, North Dakota met in special session in the council chambers in City Hall on Monday, September 28, 1998 at the hour of 7:30 o’clock p.m. with Mayor Owens presiding, pursuant to call by Mayor Owens, which was served on all members on September 25, 1998: Document No. 7640.11 - Notice.

Present at roll call were Council Members Brooks, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Lunak, Klave, Beyer, Babinchak, Bakken, Hafner, Martinson - 14; absent: none.

Mayor Owens announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter.

APPROVE CIP BUDGET, AND ADOPT FINAL BUDGET
FOR THE CITY OF GRAND FORKS FOR 1999 AND
ANNUAL TAX LEVY

The city auditor reported that the public hearing had been called on Monday, September 21, 1998 for the final budget for the year ending December 31, 1999 and that the hearing had been continued until this evening .

The city auditor presented the matter of the final budget for the year ending December 31, 1999 and stated that this will not be a full detailed presentation as received last time, that he will make some opening statements and comments to try to give council background as to what they consider when doing the budget. He stated that after the presentation it will be open for questions. He stated that he was concerned that the meeting was portrayed in the press as a battle or a duel; that the issue tonight is about cutting the mill levy and that cutting the mill levy at this time is in his opinion not a responsible choice, but that he’s not saying cutting the mill levy is a bad idea but is saying at this time. He stated that the budget the Mayor has put together over the last four months in conjunction with the Budget Framework Committee, department heads and Finance Department is a fiscally prudent and realistic budget based on all the factors in government finance and the circumstance that the City is in; that the Mayor took into consideration current needs and future needs, she is not in a position to look at one year at a time as we are in too uncertain of a time.

The city auditor made a brief presentation covering some general principals, definitions and explanations of governmental finance that are critical to good fiscal management,, commented on his own personal experience and expertise based on his 27 years in the area of public management and finance in this community,

The city auditor stated that the recommendation that he has for council hasn’t changed and believed based on current financial condition and the needs we will have in the next few years, it would be fiscally irresponsible to reduce the mill levy at this time, that he believes that reducing the mill levy will create a more significant burden in the future on those people you most want to help, our citizens, and the recommendations are to adopt the budget as presented with the levy frozen. He stated if they were concerned about how the surplus fund may be used, to designate part of the surplus fund balance brought into 1998, because they know what that fund balance is, but don’t know what’s going to happen in 1999 to be used for flood protection plan expenditures and then support implementation of performance budgeting.

Mayor Owens opened the public hearing and asked for council members comments first.

There were several questions re. budgeted items. Council Member Lunak asked when City purchased building (former Norby building) and if City took the financial responsibilities for it for tax increments, and also for Elks. The city auditor stated that the City did take the tax responsibilities for that but earlier this year, the council approved using CDBG funds to transfer money into that account to pay the bond payments on that.

Council Member Lunak asked for further detail on departments in Enterprise Funds, Public Transportation, Dial-a-Ride, Job Development, Parking Lot, City Center, and others. The city auditor stated those are summary pages and corrections will be made to include detail pages.

Council Member Lunak also questioned Jobs Development Authority and source of funding. The city auditor reported that part of the funding is from sales tax and that there will be a million and half dollars coming in from the Economic Development’s share of sales tax, other funding from rental and lease payments for such buildings as Noah’s Ark, etc. Council Member Carpenter reported he had asked for that detail and reviewed figures.

Council Member Lucke stated that if the fund balance were to go from $7 to $6.950 million, which is what his 10 mill reduction would do, did not think City would lose bond rating for that amount, $50,000 give or take is not going to have a material effect, that they should submit a balanced budget, and asked for opinion as to what is a balanced budget. The city auditor stated that is when your operational revenue will cover your operational expenditures.

Council Member Brooks stated that the budget is a financial plan for the city, this is for 1999, and didn’t hear anything about the dike plan, but knows that we’re looking at a special election to look at a quarter percent sales tax, and thinks that impacts the budget. He stated that the quarter percent sales tax proposed at $1.5 million but were probably going to need $5 million/year, and that the special assessment could cover the other $3.5 million, and people need to know what other costs are going to be.

Council Member Brooks also stated that the matter of bus wasn’t to be discussed because that was for year 2000, that he has lot of input from people, need to look at it next year.

Council Member Martinson stated that he would favor a 10 mill decrease because the people of this community, older people who have had to totally rehab their homes to make them livable, have gone through a big portion of their life savings, don’t have any reserves left, and we need to tighten our belts.

There was some discussion as to the amount of carry-over in the budget. The city auditor reported that they have in undesignated fund balance of $3.8 million projecting going into the year 1999, that they have designated funds of $3 million, $1.6 million of that is money that was in the excess sales tax and have already obligated $500,000 of that to be held as the debt service reserve fund for the Corporate Center so didn’t have to borrow that into that debt service, have used $1 million of that for the loan to the Grand Forks Homes, and those funds are gone; fund balance is being depleted, and that’s why recommended using only part of it to designate, have done budget amendments using $576,000 of those funds to fund areas that were deemed appropriate with $225,000 for wide-area network, to get our computer systems set up and to be Y2K compliant, part of it was $111,000 that helped pay additional cost for vehicles that weren’t completely covered by insurance or by FEMA; had to do New World payroll update for $25,000 and truck and hoist purchased for $113,000. It was noted that the loan to Grand Forks Homes of $1.5 million will become undesignated in three months, and that $1 million of that was from excess sales tax. Council Member Glassheim questioned the $2.8 million of sick leave, and the city auditor reported that we do not have a reserve set up to pay for that but do have to cover that entire amount, and is paid over time. He stated that the new reporting model will actually require us to carry those in the General Fund, and will simply reduce the fund balance based on that liability.

Council Member Glassheim stated that either take out of reserves or don’t lower the mill, and questioned if actual expenditures were cut in order to lower the mill, that if proposals were made to actually cut expenditures, that would not necessarily lower reserves. The city auditor reported that the position we are at presently because of what has occurred over the last few years is that it would be very difficult to cut those expenditures, that they reviewed budget trying to find numbers to cut and didn’t find significant amounts. He stated that in the future have to look at that and need to pursue a different method of budgeting that allows us to give you far more detailed information about different cost centers and programs and let council make the choice as to what are cost effective programs and whether some should be gone.

Council Member Glassheim stated he was reviewing the Social Security amount which is a separate item, and seems we are raising significantly more in the Social Security mill levy than is required or budgeted for expenditure, and questioned whether there was a need to do that or if that could be cut by half a mill without harm to reserves in that area. The city auditor stated he would have to look at that in more detail because normally try to match that as close as can.

Council Member Polovitz questioned whether a portion of the sales tax (49.5% goes to property tax relief, 20.5 for economic development and 30% for infrastructure) , of the 20.5% how much is obligated for payments, etc. Terry Hanson, Urban Development office, stated because of the obligations they currently have with the Cirrus building and others, 1999 is probably worst year as far as have obligated, that they have all of the $1 million obligated for 1999. He stated that they do set aside the funds annually and set aside enough money to cover bond payments for Cirrus building and if Cirrus makes the rental payments as expected, those funds are carried over to the following year as a cash carryover; that every year they have to budget what they have obligated, even though don’t anticipate expending it.

Council Member Bakken made statement that City has gone through some trying times, and whether taxes too high for 1999 or not, if going to address that issue, should have been addressed when started the budget package. He stated if want to look at ways of saving money, want to give department heads that opportunity a year in advance to prepare for it, and council needs time to prepare for it. He stated they have a lot of new people on council, lot of things don’t understand and could do things that would have adverse effect later on, have a lot of projects coming up, and doesn’t think its financially responsible to do it; and would vote against decreasing mill levy at this time, but is for looking at this going into 2000-2001 and forward.

Mayor Owens asked for comments from the audience.

A UND student, 3904 University Avenue, stated what concerns her is that this is such a nice town to live in, Grand Forks is beautiful, but there is so much dissent, in the media, people’s emotions get upset, and finds this fascinating, but disappointed, that many people came this evening to show their support for the city bus system because that is why she was here. She stated she doesn’t understand ramifications of the whole budget discussion, doesn’t understand mill system but there is a concern in this city and feels there needs to be more fine tuning when it comes to dealing with the public, that she thinks that they shouldn’t be cutting anything, and what would do if bus system is abolished, what do with the money and was told that it would be put into a flood recovery fund, and only hears that people will receive a tax cut, perhaps no bus system and no dike so far and no flood recovery fund because it’s all in a tax cut to the people.

Sukhvarsh Jerath, 110 Breezy Hills Cove, UND faculty, asked how much liability City is carrying forward, not meaning non-enterprising fund. The city auditor stated that the outstanding debt for the City is $120 million in bond issues. Mr. Jerath stated that City is asking for half cent sales tax and didn’t think that would pass and questioned what City would do and whether we will have no dikes, always easy to reduce taxes which can be done at anytime, but difficult to increase it once it has been reduced and thinks prudence is needed here.

Gene Schneeweis, 1004 University Avenue, questioned matter of the 1% sales tax voted in 1985, it took in $5.383 million and have been collecting that since; 50% was designated for property tax relief and was in the Home Rule Charter and that the city auditor has explained that the money from sales tax goes into the General Fund, and reason why can’t lower mill levy now and have to freeze it because can’t take it out without serious damage, have to reduce slowly. He asked how can you reduce it if the government continues growing with the level of the taxes coming in, have to stop expanding and stretching, and asked how they would do that.

The city auditor stated that last year the Youth Coordinator was cut from the General Fund because couldn’t afford them any longer, that’s why Community Relations Officer was cut from the General Fund, that there have been efforts made to reduce the mill levy, that the 1994 mill was higher than it is now, and that they need to look every year at ways of reducing the taxes and ways to look in the future if possible to start to diminish what the tax levy is. Mr. Schneeweis suggested they combine the services and why is City managing Grand Forks Homes as a private enterprise as a non-profit, and questioned where that money is. The city auditor reported that the Housing Authority is not an entity of the City of Grand Forks, Urban Development Office is.

Shurkey Swanke, 1506 South 15th Street, stated that when they knew the city was going to need a massive dike system, council people held out for the Aurora instead, and have too much money; that when two surveys by the Grand Forks Herald showed that street repair is about the number 1 concern of the taxpayers. He stated City is spending over market value for property downtown, that projects that are wanted are not necessarily the projects that are needed; proper place to address this is with the individual issues but at this point take what he can get and is looking for a tax reduction.

Kevin Tsoupas, ND ASPE, North Dakota public employees union, representing workers in the city of Grand Forks and been involved in the budget process with the City from time to time, that they have analyzed the City’s budget and City has always been responsible, that the move to reduce the mill levy is going to have a negative effect in other areas of city services that are now being offered, thinks it will have negative impact on quality of city services, and asked how can you have economic development without government services to support it. He stated that Grand Forks has excellent government services, during the flood it was the City workers who were out there, the police, fire fighters, sanitation workers, bus drivers, and were there every single day in the front lines, and to have a mill levy reduction now believes will put them in a position that can be very damaging and hurt them. The idea behind taxing is for all of us to work together and all of us making our contributions by making the whole better, opposed to mill reduction.

Terry Bjerke, 5356 5th Avenue North, stated he believes the City’s financial situation does speak for itself, we have been and are the highest taxed city in the state, and will continue to be as long as we maintain this posture; that we’ve got a sewer problem, have State dike money uncertain, City dike money uncertain and we built the Aurora; and should look at priorities. He stated there are enough special interest groups that will come before you asking for money. He stated that in the future they are looking at a sales tax increase and a property tax increase as has been addressed; $700,000 in question for future flood protection and this idea came up after they started questioning the council’s spending, and way to make more palatable to the citizens of how to keep their money; affect the bond rating and if citizens don’t accept higher taxes wont’ have a dike and pay more in flood insurance. He stated he believes this is a scare tactic and attempt to frighten people and a way to get them to pay more in taxes; that Council Member Carpenter stated the money is needed to provide the benefits of the citizens of Grand Forks, that he doesn’t need any more benefits; that they’ve heard that some of the elected officials, unelected city bureaucrats concerning the fact that we are flood victims who are still emotionally upset, only way to build consensus in the city is to vote in prescribed manner and thinks it time they have a change. He stated it’s time council stands on its own feet, that they are elected to do a job and look at ways to do some different things. He stated that we need to evaluate where going as a politicians, some on city council, who cater to special interest groups, fine to fund projects but for people who want to live their lives and take home their own money and spend as they see fit.

Kathleen Dickson, 2016 9th Avenue North, stated that she was driven out of town by the flood, now comes back and hears people talking in this fashion, talk that is not very reasonable or informed about cutting things like the city bus service, people who need the bus service need to be listened to as well, and questioned how much she would save if given a tax cut, that with value of her house save $35, wants this to be a place for everyone to be in and wants this to be a good place to live; need reasonable discourse.

Dave Brower, 722 Cherry Street, stated it’s not a matter of $35.00 but $35.00 and $35,00, etc. for years and years, but fact that it’s the taxpayers money,

Bill McKechnie, 203 Cleo Ct, attorney, stated they have to be conservative but have to be prudent, thinks budget and information provided is accurate and correct and what’s going to happen in the next couple years carrying little bit of extra money over is smart management move, that he doesn’t like to pay taxes, but thinks budget right on this and this is not the right time to cut taxes. He stated a lot of people are upset in the town and using this as a way to vent their spleen. He stated he’s concerned on amount of money spent on consultants who didn’t tell us anything we didn’t already know, that have talented people in this town and wouldn’t have to go to Minneapolis, etc. He stated City is locked into either raise our sales tax, raise our property tax or somehow adjust the mill levy to raise the money for the dike project, and reason we have a flood is because dumping water into the Red River. He stated City should go to the State and ask them to set up a tax to charge people dumping excess water into the River, take 3 or 4 feet off the amount of water that went into the Red River, and wouldn’t have to spend a couple hundred million dollars for a super dike system, and solve this problem; shouldn’t be our responsibility to pay for all the dike and State of North Dakota and State of Minnesota should be looking at a region wide basis approach to solve the drainage problem.

Chuck Bundlie, 1219 Chestnut Street, questioned the matter concerning the automatic trash pickup that’s apparently on the way here in our city, that article in paper stated to get the new system off the ground the City spent $550,000 for five side-load trucks with packers, and $650,000 for 11,900 plastic garbage containers, that’s $1.2 million, and Mr. Newman stated that by this should be able to reduce staff by 5, and if paid by $35,000/year that would come to $175,000 and assuming 5 years of savings on personnel, $875,000 and still have $325,000 to go before purchased trucks and containers; that Mr. Newman stated they were going to phase it in, but because of the flood did it all right away. He asked if math right or article wrong, lot of money to convert a garbage system overnight. Todd Feland, public works department, stated that some of the costs not included, 5 or 6+ positions out through attrition, etc.

Vince Ames , 605 Plum Avenue, and presently living at 3237 Boyd Circle, stated that the council are people who have been elected to represent them as citizens of Grand Forks, and some are still in the “hurt” bag and talked to Mr. Lucke and Mr. Brooks over last few years, and when they get a tax bill from the City, don’t have the reserves, lost them, and are in relocation type situation, ready for retirement.

Mayor Owens closed the public hearing.

Mayor Owens made a few comments that during the flood challenged heavily, has been told by federal officials that a city that goes through a disaster of this nature, do not recover financially for many years and many do not recover at all. She stated they try to keep budgets in line and have no problem with being scrutinized, that the budget for 1997 was prepared starting in early April, and in 1997 were working 20-hour days, and they maintained the 1998 budget as it was in 1997 for the operations, and cut many programs, cut Youth Committee, and Community Relations Officer, and many programs within the community that are coming to her as they need the money; that these were very difficult decisions. She stated that in the 1999 budget before us, there is a 2% increase in operations, that she has been approached by 11 people who have worked full-time part-time to be made full-time employees but she and Budget Structure Committee rejected those people. She stated that they have been questioned about the employees that were put on board after the flood and covered by CDBG funds, and one of the consultants, Andrew Coumo gave to our city when she and staff went to Washington, D.C. that he would give the City $1 million in their funds to have the finest planners and consultants in the nation come on board, EQE came on board at that time and have worked in many disasters and worked with FEMA and needed that because we didn’t have book to go by; they helped us through our first season of recovery and they told us that we should have about 125 added positions under the CDBG funds, that they hired 89 and now have had Human Resource Office shadow those people to make sure there is no one on board that isn’t doing any work and down 15 at this point, contracts are open with no intention to hire and are downsizing as quickly as can, most contracts are six months to a year but can let them go at any time when see there is no need for them. She stated they have been challenged to the limit, needed inspectors, need people in financial area to audit because in Des Moines IA they did not have people on board that had expertise and ended up paying a tremendous amount back to the federal government because did not qualify for CDBG funds, and we want to make sure to do the best job we can so as a community are not stuck with heavy bill at the end. She stated that if we had not received the $171 million in disaster aid, we would have been able to buy out approx. 200 homes through the FEMA, but will be able to buy out the homes that were destroyed and that will be approx. 798 homes; that we have been able to jump start our businesses, have been able to build buildings to increase our tax base, have had some things that have been questioned but we don’t have a crystal ball either, and all these funds are audited so they make sure that are jump-starting our city for flood recovery and we have $2 to $3 billion of damage in this city and $171 million is the largest share ever given to a city, however, it is a drop in the bucket when look at entire lost and have tried to manage it and it’s a very hard task when trying to get tax base on board in a hurry. She stated they have 3 other governmental bodies that are also taxing entities of the city, but we are only 25% of the tax base. She stated that they have $200,000 in emergency funds for snow removal, our people expect their streets cleaned but $200,000 doesn’t go very far if we have winter like prior to 1997 flood, and need money to be able to provide that and no where else to take it except out of the carryover. She stated we will not have a flood protection in place for perhaps 6 to 10 years, not total flood protection, but have shored up the existing dikes, installed flapgates, and prepared for 52 ft. with sandbagging and clay, and if faced with that challenge again, wants to make sure that we have some funding so can put some secondary dikes in line and without funding cannot do that; federal and state governments aren’t going to take care of us forever, and knows that everyone taxed to the limit. She stated that if that money not spent, next year and year after will scrutinize budgets closer, people expect that and possibly point in time where can start reducing taxes. She stated we are in a state of recovery and in order to recover, need money to do things that people need; that they talk about the quarter cent sales tax and assessments for dike project, sounds like an alarmist thing, we are faced with this and when tell the truth told they are alarming people, and it is something have to face, not only our responsibility as elected officials, it is responsibility of each and every person in this city to help make this city the best it can be, and need your help to take care of things. She stated that with the quarter cent sales tax - was at ND League of Cities in Minot, and small cities in region that shop here asked how we expect them to pay quarter cent sales tax towards dike if do not put money into it yourself, and how can we give ourselves a tax break at this time and go to small communities all the way to the Canadian border and tell them we need their quarter cent, and they will bypass us. She stated that our businesses are having a hard time surviving and a quarter cent sales tax does put a strain on them also. She stated they discussed talking about dropping the city bus, and think they need to operate all departments, including city bus, and need to be more accountable and educate the public on what is going on, but do not want to hurt the people that need it the most, and we do need a bus system. We have the elderly, disabled, University students, hurt businesses and hurt people across the entire city if take out the entire bus system. She stated that when comes to taking care of all citizens of the city, all have different needs and have to accommodate and help those needs but do it in the most cost-effective manner that we can.

Mayor Owens stated she had received call for explanation on original sales tax, that one percent sales tax was voted in by the people in 1985 for the expansion of the water plant with a sunset clause; in 1987 it passed vote again with no sunset clause and was to be used and has been used - that now 49.5 % of funds collected is for property tax relief; 30% for infrastructure (repair of streets, etc.) and 20.5% goes for economic development. She stated that the ¾ percent for The Aurora does have a sunset clause on that and was voted on twice by the people and did not know the flood was going to come, held it and asked for two years and held it for a year and were losing money and funds were dedicated so it was better to continue and put money towards it and use as an economic development tool for our city. She stated if we had known the flood was coming, there may have been a different opinion, and stated there’s nothing wrong with scrutinizing but we are a city that has recovered faster than any city in the nation with the disaster that we had, but we need to learn to work together, don’t have to agree, but have to work toward what we feel is best interests of everyone and whatever decision is made tonight we will leave here with one thing and that is respect for one another and for our citizens and continue to work together.

Council Member Carpenter stated that it was stated by one member of the public that the idea of setting aside money came as response to this 10 mill decrease, that couldn’t be further from the truth, setting aside money for flood protection was debated by the Budget Framework Committee last February/March/April, was discussed by Capital Improvements Committee in early August and it was decided not to be set aside specifically in the Mayor’s budget but allow more flexibility with the council to meet the emergency needs as they come up, whether it’s sewer line repair, watermain repair, flood protection plan so that the dollars are available to be put to the projects as they come and are needed. He stated we do need the money, as there are significant needs out there and those dollars will be spent on needed projects like sewer main repair, street repair, watermain repair, all that have been significantly damaged because of the flood and of which there is FEMA money for some, CDBG money for some, but also local dollars that are needed to match those dollars to be used for other improvements, we don’t have all the money coming from a federal source. He stated that there have been tax cuts, last year there was a tax cut, and the property tax revenues for the city of Grand Forks declined by 3.85%; and under this proposal would go back up, still to a lower dollar amount than they were preflood. He stated that basically most home owners do not pay increased taxes of the last two years. He stated that if they do reduce this by 10 mills, they will have an operating deficit - looking at on-going revenues versus on-going expenses and have operating deficiency of $600,000, and if take that in combination with the employee wage increase that they have negotiated, a two year settlement, and that brings benefits and salaries to about $566,000 and if take those two in combination that’s almost $1.2 million, and if we take in the year 2000 budget and decide how to come up with that revenue, either have total tax increase of 12% or cut budgets and/or combination. He stated that if they want to cut the $1.166 million from the general fund that’s about 7% of the general fund, and where do we cut that - police and fire make up approx. 50% of our general fund and of that amount 89% is in salaries and benefits and only way cut 7% out of police and fire is to eliminate all capital outlay and most of operation and maintenance, not feasible, or have to cut staff and what he hears most often from citizens is they want increased patrols, increased radar, heavier traffic enforcement and want more, not less. With fire, haven’t heard anyone say want to reduce staff and coverage for fire; and not magic solutions to solve these problems. He stated they’ve reduced normal capital in this budget, normally $350- 450,000/year, and this budget has $300,000, haven’t funded fire pumper, southend fire station, Y2K costs, haven’t put money aside for flood protection, have the issue of questioned costs that may have to be reimbursed to FEMA or CDBG to the federal government down the road, and if have 1% that almost $2 million and would come from dollars we have available. Someone stated that streets are a high priority, and are more so now and have taken some steps to try to address streets, there are needs for the funds, not collecting revenue to have it sit in the bank, it is because we have needs and need dollars to address those; our source of funds is from the taxpayer and those dollars are spent for the benefit of the taxpayer. He stated there’s some allusion that we’re highly taxed in Grand Forks, our property taxes are higher than the state average on a $70,000 by $100 per year. He stated he thinks we have a good budget, one that makes sense for the future of Grand Forks and shouldn’t reduce the mill levy, keep it and dedicate and set aside $700,000 for the flood protection plan and those dollars would then be available for the costs that we’re going to have in the future and have to be met through the sales tax or through a special assessment to fund the local share of the protect, that’s a prudent measure and been discussed before, and feels it is appropriate and should be set aside.

It was moved by Council Member Lucke and seconded by Council Member Lunak that we approve the budget as presented and to reduce the general fund tax levy by 9.15 mills which will balance the budget.

Council Member Carpenter moved an amendment to delete 9.15 mill levy reduction and that $700,000 of 1998 cash balance be designated for the flood protection plan; seconded by Council Member Babinchak.

Upon call for the question on the amendment and upon roll call vote the following voted “aye”: Council Members Hamerlik, Bouley, Glassheim, Carpenter, Klave, Beyer, Babinchak, Bakken, Hafner - 9; and the following voted “nay”: Council Members Brooks, Polovitz, Lucke, Lunak, Martinson - 5. Mayor Owens declared the motion carried.

Council Member Glassheim moved an amendment to the motion to decrease the $700,000 dike set aside to $500,000 and to substitute the reduction which would amount to a 4.75 mill reduction. Council Member Brooks seconded the motion.

The city auditor stated that he wasn’t sure what this would mean to the budget, as some of the reductions in the general fund, even though only $5,000 in MIS, their budget is the same as had in 1996, police department’s budget is the same as they had in 1996, and requesting a $10,000 reduction, that the civic is only $3,200 more than it had in 1996 and requesting a $5,000 reduction; that the street department is a $5,000 and they have significant increase of $90,000, but also based on the fact that they spent $80,000 more in 1997 than 1996 on vehicle maintenance than they’ve had in their previous budgets. He stated he doesn’t know what it means in others in social security, special assessments, and Economic Development.
Council Member Glassheim stated that the general rationale is that he’s disturbed with an either/or situation, either emotion or reason, either totally taken from reserves or don’t take anything, and both sides of this debate are right, have to be responsible, that’s our job and in the long run, the health of the city, people may thank us but may or may not tonight. He stated on the other hand we have to be concerned about the individual people and what they’ve suffered and their attitude toward the City, towards our capability of saying no without compromising the City’s viability in the future and feels his motion will not do harm nor damage to any department or any budget. He stated he put together a variant of sources that he doesn’t think will destroy any particular program or activity. He stated he doesn’t like the 9.15 mill decrease because that didn’t involve any spending cuts and put together about 2 mills of actual spending cuts, actual decreases and maybe another two mills of different special funds that may not need the money. He stated that he went through the budget and found items that had large increases from the year before and therefore could sustain a $5 or $10,000 cut. He stated his intention would be that any department or budget that did receive a cut this year would be last in line were there to be cuts considered for next year, so that again the point is not to do anything drastic or destroy things but to go slowly and make small cuts which may add up to something. He stated what he was trying to do was to take the truth that was in both sides of the argument and find a practical way to make them both happen.

Council Member Hamerlik questioned whether the $500,000 would draw interest and be put into that account or into the general fund. The city auditor stated that money will stay in the general fund but will be a designation of part of the fund balance, and will draw interest, and that interest unless you specify differently, would actually flow back into the general fund normal operating revenue, or if in the motion want to increase this based on interest earned on it, that can be part of the motion but not normal operating process. It was noted if it was designated for dike protection it would seem it should be in a separate account that it could draw interest no matter where invested but credited to that account. The city auditor stated the motion was to designate $700,000, not $700,000 plus interest earnings.

Council Member Carpenter stated he had some concern on the motion, that transferring $500,000 from sales tax from economic development to property tax relief, and more appropriate to be spending money on economic development, and heard people suggest that we need to be spending more money in economic development, being more aggressive in attempting to recruit people and businesses that have high paying jobs to Grand Forks to reduce that budget at this time is inappropriate and another significant part of this is reducing the carryover by $105,000 and that’s not addressing reducing spending, just reducing mills and a cash balance, decreasing special revenue funds and not sure appropriate. He stated in looking at Planning & Zoning on-going revenues and expenses actually we are spending about $10,000 more than taking in but reducing the balance and this would further reduce the balance.

Upon call for the question and upon roll call vote the following voted “aye”: Council Members Polovitz, Lucke, Glassheim, Lunak Martinson - 5; and the following voted “nay”: Council Members Hamerlik, Bouley, Carpenter, Klave, Beyer, Babinchak, Bakken, Hafner, Brooks - 9. Mayor Owens declared the motion defeated.

It was moved by Council Member Hamerlik and seconded by Council Member Klave that any interest derived from ear-marked money from the dike protection plan be moved and put into the dike protection plan account. Carried 14 votes affirmative.

Upon call for the question on the original motion, as amended, to approve the budget as presented, with a designation of $700,000 for flood protection purposes and interest on the designated fund be remitted back to the fund; and to approve the 1999 CIP budget and adoption of the resolution and certificate of levy, and to introduce the following resolution adopting the budget: Document No. 7641 - Resolution

Upon call for the question and upon roll call vote the following voted “aye”: Council Member Hamerlik, Bouley, Glassheim, Carpenter, Klave, Beyer, Babinchak, Bakken, Hafner - 9; voting “nay”: Council Members Lucke, Lunak, Martinson, Brooks , Polovitz - 5. Mayor Owens declared the motion carried and the budget adopted.

ADJOURN

It was moved by Council Member Lunak and seconded by Council Member Klave that we do now adjourn. Carried 14 votes affirmative.

Respectfully submitted



John M. Schmisek
City Auditor


Approved:
______________________________
Patricia A. Owens, Mayor