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PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
September 3, 2002

The city council of the city of Grand Forks, North Dakota reconvened in the council chambers in City Hall on Tuesday, September 3, 2002 immediately following the budget work session which followed the city council meeting of September 3, 2002 with Mayor Brown presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Gershman, Christensen, Kerian, Kreun - 7; absent: none.

Mayor Brown 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, and taped for later broadcast.

Mr. Swanson, city attorney, advised that once the council gives preliminary approval to an annual budget, the council does have latitude to change it, however, those changes can only be downward, that once you give approval to the preliminary budget, it cannot be increased.

Council Member Glassheim stated if he wanted to make a motion raising three mills but not changing the totals in the budget, would he have to do that tonight or could he do that at a later point, or transferring from one fund to another. The city auditor stated that they do not adopt the mill levy resolution until the final night of adoption of the budget and would have the opportunity at the time of final adoption making the revenue changes at that time.

The city auditor reported that the night they presented the summary presentation he had stated that he would need to ask you on the budget presentation to amend the budget to include the capital for the Alerus facility if you so desired and that would be in the amount of about $276,000 but the funding source for that would be the debt service reserves that have been set aside; and are asking that they combine the E-911 and the PSAP budgets so have all the revenue and expenditures for that area together; and in an area to better facilitate employee relations and their assistance is moving the comp. and benefit specialist from the finance department to the human resources department, and this is to inform you of those changes that will be in the final budget.

ADOPT 2003 PRELIMINARY BUDGET

Mayor Brown asked if there were any citizens present who wished to address the city council.

Terry Bjerke, 5356 5th Avenue North, stated he heard that the council instructed the mayor to keep the mill levy the same and to keep the services the same and that was a majority vote and not a unanimous vote, that there were 3 council members of the 14 who were at that meeting who did not agree with that statement and believed the City should have gone a different way, instead of saying no mill levy increase but keep the services the same.

Mr. Bjerke presented several questions:
Utilities: $540,000 which will be transferred to the general fund which is approx. 6.25 mills and that it is a payment in lieu of taxes for police, fire and streets, and he happens to believe it is false taxation and doesn't agree with that system and because Fargo and Bismarck does it, he doesn't care, but will listen to what Fargo and Bismarck do as good comparative analysis; and believes they are increasing the mill levy by 6.25 mills. The last number he had the general fund was going to increase by 4.8% and if that is correct from June, 2001 to June, 2002 the figure the City of Grand Forks uses for inflation was eight tenths of 1% and if increasing 4.8% that's 6 times the rate of inflation; the property tax revenue has increased from 3.65% and that is 4.5 times the rate of inflation, projected sales tax increase of 4% would be 5 times the rate of inflation, the reevaluation of residential property which goes up 2.8% would be 3.5 times the rate of inflation and we are going up higher than the rate of inflation. He stated that since the survey came out he has heard a lot about the survey, that polls are good tool and can teach you and give you information but not a use for management but if use that theory, go with the survey, and read question from the survey, "next year if the city of Grand Forks doesn't have enough revenue, it would be better to reduce city services than to raise taxes - 14% were neutral, 49% said they agreed that taxes should not be increased but reduce city services, 37% said the opposite and majority of people said not to raise taxes, cut city services - that if re-evaluate residential property and the increase is 2.8%, we have raised taxes. Sales tax has increased - and goes back to 6.25 mills but just coming in the back door - that if saying by raising utilities that not really raising taxes but thinks we are , and by re-evaluating residential property are raising taxes.

Street Department: He asked if it was true that we were going to keep $100,000 out of the $600,000 from Highway Users, and from now on permanently 25% of Highway Users will go to the street department; the city auditor stated that will become a policy if adopted by the city council.

Greenway: He stated on information on the greenway - 2003 capital projects (greenway mowing, greenway tree maintenance, snow removal and flood cleanup and the total for those projects is $150,000 and asked where the funding would come from; the city auditor stated that at this time it comes from the flood control project until determine a funding source. He stated that as of now all the work on the greenway is being funded from the dike special assessments; the city auditor stated that was correct; and Mr. Bjerke stated we have a lot more trails to build, lot more dikes to build, light poles, trash cans, etc. that we have spent $150,000 this year out of the flood control project for greenway maintenance and if that amount now, what will be cost when it's all built and we have no funding source for that and recommend putting that on our list for planning in the future, how we are going to pay for this.

Town Square: $45,000 budgeted and asked if that was a yearly number or one time; the city auditor stated that was yearly number and was a combined number before to the amount of $80,000 and some of those numbers were split. Mr. Bjerke asked if Town Square charges any fees for use of that; do not.

Sick leave: He stated we spent about $50,000 and seems to be consistent and yet we keep a million dollars in that fund and if we have to do that or a policy of the city. The city auditor stated it is a policy of the city and primarily do that because we have to record in our annual financial report what the accrued liability of sick leave is and that liability is far greater than the $1 million.

Civic Auditorium: He commented on increase in that and would hope that the mayor and council would in the very near future would make a decision or begin the process to determine what is to be done with the building, and if don't have a use for that building and the amount of money paying to keep that building, maybe look to see what it would take to knock that building down if we really don't need it.

Public Transportation: In 1996 we did a consultant study, in 2001 did a consultant study and did none of it, every recommendation they made to make this system work threw out the window.

Senior Bus Dial-a-Ride: same service and should be trying to save some money there, but not, and hope that we never again hire consultants for public transportation because if not listen to them when they say how to make the system more efficient, wasting our money.
Recycling: this is approx. $400,000 year in the budget and look what other cities do for recycling, that Minot doesn't have a mandatory city-wide curb side recycling program, that Bismarck does not, and Fargo's recycling program have to volunteer and sign up to be on it and had to pay an extra $2.90 to get your curbside recycling picked up - wasn't part of your normal fee but an addition to the fee.

Flood Protection - 15 mills: Minot has a 1% sales tax dedicated strictly to a water project and not the only city in North Dakota that has dedicated money to a specific water project.

Mr. Bjerke questioned whether council members would vote to give UND any amount of money for student recruitment or research money for 2003; or give CVB any additional money for marketing; whether give the Alerus $250,000 in additional promotional money; and whether give any money to the Human Needs ($100,000 out of excess sales tax).

Council Member Christensen stated he will not vote for any of those items this year because all of those expenditures are coming out of Fund 2163 (discretionary dollars this council has to spend and as to the proposed expenditures of 2163, at this point we have approx. $650,000 that has not been committed for our discretion going forward in 2003 and along with his colleague, Mr. Gershman, he is going to reserve his decision on how we spend that $650,000 because in this community we have an economic development engine called the Alerus that we have a primary responsibility to make sure it operates, it functions and we allocate the capital we have to maintaining that community business asset; 2) that in this budget we allocated $232,000 as a reserve for a shortfall in case the Alerus has a problem and that money has been spoken for, and we have tentatively committed funding $1 million in speaking with the University for the EERC which is going to require $250,000 for the next 4 years coming out of that $650,000; if we do that there is only $400,000 left, and when you asked Mr. Gershman if he would spend the money for the grants or the student recruitment, probably not this year because our funds are just as scarce as the University's funds are and we have to have that money available to do a deal because we've been told by all of the consultants and probably going to hire more, that we have to take and promote economic development in this community - that it takes money and spend money to make money; and the answer to Mr. Bjerke's questions is no. That the discretionary funds we have this year, we're going to allocate as best we can for future economic development projects.

Council Member Christensen stated in our wastewater department we raised it $1 million this year, the $230,000 is being transferred as a transfer in to help balance this budget is insignificant in light of the fact that over 45% of the wastewater budget is being used for debt service, and our community is funding on an annual basis $3.6 million out of our wastewater funds to pay for wastewater improvement projects, and we have to find the monies to fund some of the promises we've made to our employees. We've said this evening that we're going to work going forward in the next 120 days to explore how we deal with these issues because it isn't going to get any better going forward in light of the mandates we have to deal with as far as paying for our improvements. That by 2002 the federal government says we have to meet these standards. Mr. Bjerke stated that if we don't do this, we can't supply the basic services but you continue to fund all the frills - have to have wastewater sewage system, don't have to give money to the arts, and there are choices to be made.

Mr. Bjerke mentioned the Alerus capital budget, the Alerus has been in the works for 8 years, there is no plan for a capital budget, and what needs to be done out there - you have no money for wear and tear, if the astro turf wears out you can't replace it; you have no money to make up for the $5 million of stuff they threw out because they ran out of money (i.e., escalators); the parking system doesn't meet Code and need more land and need to pave that; and the end of that bond when it runs out you are going to have to save some of that money to make capital improvements on that building.

Mr. Bjerke stated the solutions are: cut spending or raise taxes; and stated he could cut money out of the budget, $1.62 million. The other solution is to raise taxes and would not vote for that. He stated they have storm sewer regulations coming up, new wastewater treatment plant, water plant, landfill - $100 million probably more; two dike special assessments and all he sees on the horizon is more increased fees and increased taxes and you continue to do all these things on the side, and don't say that if we don't do this we can't plow the streets or can't have enough police - you've made the choice and if you choose all those frills and just out and say it, that you want to do all this and that's why want to be the highest tax city in the state.

It was moved by Council Member Christensen that we approve the preliminary budget with the changes as noted by the city auditor; seconded by Council Member Kerian. Upon call for the question on the motion to approve the preliminary budget as amended, the motion carried 7 votes affirmative.

ADJOURN

It was moved by Council Member Hamerlik and seconded by Council Member Gershman that we adjourn. Carried 7 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor

Approved:
_____________________________________
Michael R. Brown, Mayor