Board of City Commissioners - August 8, 2018 Special Meeting Minutes
Agreeable with a call for a Special Meeting issued by Mayor Mahoney, the Board of City Commissioners of the City of Fargo, North Dakota, convened in a Special Meeting in the City Commission Room at City Hall at 12:00 o'clock p.m., August 8, 2018.
The Commissioners present or absent were as shown following:
Present: Gehrig, Piepkorn, Strand, Mahoney.
Mayor Mahoney presiding.
Mayor Mahoney said North Dakota Century Code 40-40-04 requires the governing body of each municipality annually, on or before August 10th to approve a preliminary budget, establish a maximum level of expenditures and make a preliminary budget statement. Changes can be made, he said; however, the total amount of the approved budget cannot be exceeded. He said current initiatives will be continued, including: the Police Department lease/purchase of the Border States Electric offices; permanent flood protection; working towards the Red River Water Supply Project; the new water treatment plant start-up; focus on neighborhoods and code enforcement; fostering strategic economic development opportunities; opioid reduction efforts and a portion of the General Fund Capital be funded through the Capital Project Fund. He said prioritization will be reorganization of the Engineering and Inspections Departments; hiring a Facilities Manager; fit-up of new Police Department central headquarters; Wastewater Treatment Plant expansion; new Fire Department pumper truck; Performing Arts Center and a Civic/City Plaza Task Force; utility rate increases; potential redevelopment of Police, Health, Park East and Mid-America Steel locations; and implementation of recommendations from the Special Assessment Taskforce. There are few changes in revenue projections from the previous meeting with the Board and expense projections are 1.9%. He shared the proposed fee adjustments and said utilities are to pay for themselves; however, the City continues to grow.
Transportation Division Engineer Jeremy Gorden said street light fees need to be increased. He shared a proposed fee breakdown and said the increase in funding is not only for street lights, it includes rolling in traffic signal repairs and maintenance and staff. Work continues on how to make the system more fair for commercial properties and larger lots, he stated.
Commissioner Piepkorn said he feels gradual increases in rates are more palatable and he suggested a smaller increase.
Commissioner Piepkorn moved the residential fee for 2019 be adjusted to $3.50.
Second by Strand. On call of the roll Commissioners Piepkorn, Strand, Gehrig and Mahoney voted aye.
Absent and not voting: Commissioner Grindberg.
The motion was declared carried.
Storm Sewer Division Engineer Jody Bertrand shared proposed new rates for the storm water fee structure. He said larger lots with more impervious area will have a monthly fee. He said as a backlog of projects are completed, the portion of special assessments will increase accordingly.
Commissioner Gehrig said a Task Force is being created to address special assessments and now to raise storm water fees and increase special assessments is the opposite of what people are demanding. This is an increase from $1.6 million to more than $3 million in one year, he said. He feels this is unacceptable, and the Board needs to find a better way to do it so projects can be funded, he said.
City Engineer Brenda Derrig said as far as the storm water fee recommendations, the special assessment policy is being followed. She said whatever the result of the Task Force is, policy will continue to be followed and the Capital Improvement Plan will be adjusted to meet the recommendations of the Task Force.
Mayor Mahoney said it is the volume of work that is increasing. He said there has always been a storm water policy; however, the city footprint is getting large and if storm water needs are not taken care of, many basements could be flooded.
Mr. Bertrand said the number of lift stations has doubled since 1998 and there are a number of lift stations that have not been touched since the 70s or 80s when they were originally constructed. The intention of redistribution is so the majority of the increases are borne by the larger, more impervious parcels. He said more than 1,000 commercial parcels will see a decrease from $15.00 to $8.00, and residential rates would increase $1.00. He said projects are falling behind the level of service the City needs.
Fire Captain Eric Eisenlohr spoke on behalf of Firefighters and as Union President. He said studies have compared wages of Fargo’s Fire Department employees with others similar to Fargo and after adjusting for different costs of living, comparisons showed Fargo is 19% below average, with lower benefits and compensation. This is the result of slowly falling behind market changes, he said, and the firefighters would like to work with the Board to bring their employees up to average. Trained employees are being lost to other departments and professions paying more, he said.
Commissioner Gehrig said since he has been a Commissioner, there has been a 2% or more COLA increase, and compounded that is millions added to employee benefits and pay. He said he proposed a different COLA costing half as much, affecting those making less than $80,000.00 a year; however, it did not get included in the budget. He said the Board knows some are unhappy and he hopes to work with employees, doing the best with what is available.
Assistant City Administrator Michael Redlinger said study work is not planned for 2019; however, the Position Evaluation Committee (PEC) has added two steps to the firefighter pay system for next year as 25 firefighters are at the top of their grade. He said the City is committed to studying the issue organization wide.
Commissioner Piepkorn said comparisons are not always the same and it would be good to meet to discuss them.
Mayor Mahoney said a variety of things go in to pay and he said he feels the firefighter salary is competitive. He said he does not feel their wages are 19% below average; however, the Board can look into it.
In response to a question from Commissioner Strand about what the firefighters proposed, Mr. Eisenlohr said it was to get to average, move firefighters to the same pay grade as police officers, and move Fire Captains up a pay grade. Adding the two pay grades really does not touch the difference, he said, and morale is down and losing staff costs the City. He said the firefighters will always provide the service; however, they wish they were paid a comparable rate.
Mayor Mahoney said the firefighters union came in with a study and it was looked at. He said the reality is that the $400,000.00 for the Fire Department would be doubled or tripled if wages for all employees were adjusted to keep it fair. One has to look at the whole package, he said, not every city does things the same.
Commissioner Gehrig said he would vote to approve the preliminary budget since changes can still be made as part of the process. Significant things can still be done, he said, for example the City is paying $400,000.00 for the Arts and Social Services fund. He said there are things that do not need to be paid for, while there are unhappy employees.
In response to a question from Commissioner Strand about what the Park District, School District and Cass County are doing this year, Mayor Mahoney said as far as he knows the School and Park District appear to be the same. He said there is debate at the County whether to add 3 mills for 3 years to handle State radio or ask for a one-year sales tax.
Finance Director Kent Costin said the mill calculation is about $557,000.00. He said the last three years, the money has been drawn from the Budget Stabilization Fund, also known as the rainy day fund, leaving a balance of only $200,000.00 to $300,000.00. He said it was accessed when state aid lessened. He said there is a trend line of drawing on resources, to the point of a deficit, largely due to tax cuts and the decay of state aid. If there is growth in state aid beyond what is projected in the budget, he said, the budget team would recommend keeping it in the radar to deposit money back into the rainy day fund.
Commissioner Gehrig said there are multiple reserve funds. He said citizens wonder why taxes are raised when there is $35 million in reserves. He said he is not suggesting to raid the piggy bank; however, once it is at the 25% mark, use what is needed and return the money back when it is not needed.
In response to a question from Commissioner Piepkorn about whether a percentage of reserve is a requirement of the state, Mr. Costin said while it is not required, it is a best business practice to have a reserve and to monitor and evaluate the volatility of the revenue sources.
In response to a question from Commissioner Strand about whether there is a way to find resources for the request from the firefighters, Mayor Mahoney said there is not an additional half million dollars in the budget and, it would not be fair to other employees. He said their market study was biased, while the City’s was a different direction. The data will need to be merged and looked at, he said, which takes time to review in a thoughtful way.
Commissioner Piepkorn suggested Commissioners review the market studies and meet with Human Resources and Fire Department representatives.
Commissioner Strand said the sentiment in the community is to hold the line. He said there is the balance between services the city can provide and what the City can afford, yet the City is only one part of the bigger picture for the overall millage. He asked relative to the reserve fund of around $33 million, and the City’s requirement to be at 25% of the general fund, is there room or a desire to show any additional relief to the public, perhaps 1 or 2 mills, and reducing the reserve fund accordingly?
Mayor Mahoney said this is a tight budget. City costs and wages have gone up 5.7%, he said, and the budget takes in only the growth and not any mill levy increases. If two mills were cut it would result in personnel being fired and he had requests to hire 29 people, he said, and only 4.75 people will be hired. No more can be taken from reserve, he said, it is down and the stabilization fund is negative now and if it is reduced, bond rates go up.
City Administrator Bruce Grubb said going into the reserves was not considered in this budget process. He said the Budget Committee worked within revenue projections and matched up expenses to try and be balanced.
(Commissioner Grindberg present.)
In response to a question from Commissioner Strand on whether there is a sense legislatively of where the topic of government subdivisions and reserves will go, Commissioner Grindberg said, as he understands it, this will be a tight legislative session. He said he does not know if there will be a change in percentage of fund balances and it would be difficult to predict. He said the new legislative makeup will not even be known until November. From his discussions with Finance Director Kent Costin on reserves and the history, he said is comfortable with not using reserves again. He said balancing new growth and holding on mill levys is prudent at this point.
Mr. Costin said the City issues a lot of municipal debt and Moody’s watches the City closely. He said Fargo was given an AA rating; however, the outlook was changed from stable to negative. If the trajectory of the budget is not changed and reserves are not maintained, there could be a downgrading in the bond rating, he said, and to be downgraded a notch could be several basis points and millions of dollars used for special assessment debt.
Commissioner Strand said he supports the budget going forward, and he supports a market study going forward, particularly for Firefighters for more clarity.
Commissioner Piepkorn moved the 2019 Preliminary Budget be approved maintaining the property tax mill levy of 51 mills and the public hearing be set for September 10, 2018 at 6:00 p.m. in the current City Commission Room.
Second by Strand. On call of the roll Commissioners Piepkorn, Strand, Gehrig, Grindberg and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.
Commissioner Piepkorn moved that the Board adjourn.
Second by Grindberg. All the Commissioners voted aye and the motion was declared carried.
The time at adjournment was 12:56 o’clock p.m.