Y

n

d w

qN

CITY OF ClIANHASSENH

ASSChanhassen is a Community for Life- Providing for Today and Planning forTomorrow

MEMORANDUM

TO: Mayor& City Council

FROM: Greg Sticha, Finance Director w

DATE: February 13, 2017 if ,

SUBJ: KEY FINANCIAL STRATEGY: 2018 Budget Outlook

BACKGROUND

During the Key Financial Strategy goal- setting sessions, the city council identified the desire tohave an early budget meeting to discuss potential budget impacts for the upcoming year. Thediscussion would prove to be helpful for the council to consider and research any budget impactissues in advance of the budget meetings that take place in the summer. The implementation of

the second budget year in the city' s budget document proved to be useful in preparing for thisrequest.

It is very important to clarify that the numbers presented in this document are extremelypreliminary and should be considered estimates only. We used historical trends and informationwe had available whenever possible, but the majority if not all of these numbers will change tosome extent between now and setting the final levy at the end of the year. In addition, thesewere the significant changes staff was aware of at this point in time. It is very likely there willbe other significant changes that could have an impact on the 2018 budget not included in this

list; therefore, the list should not be considered all inclusive. Staff will do its best to

communicate any other significant impacts on the 2018 budget as soon as they become available.

POTENTIAL REVENUE/POSITIVE CHANGES IN 2018 BUDGET

The first number we usually discuss each year when setting the budget is the new growth (or newhomes/ businesses constructed or improvements made). Based on the current new growth trends

and the previous year' s permits and construction, staff is estimating new growth to be around1. 4% for taxes payable in 2018. This equates to roughly$ 150,000 in new tax dollars available to

offset any increased service costs.

In addition, in 2018 the city' s debt levy is being reduced by roughly S 117, 000/year because ofthe refunding of the Public Works Building bonds.

Lastly, based on discussion with city council in last year' s budget-setting process, staff isresearching the appropriate amounts of costs to be allocated to the city' s Enterprise Funds that

PH 952. 227. 1100• www.ci. chanhassen. mn. us • FX 952. 227. 1110

7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317

Mayor& City Council2018 Budget Outlook

February 13, 2017Page 2

are currently being paid out of the city' s General Fund. Staff will be making a separatepresentation about those allocations to city council later this summer, but based on the initial datareceived by staff we are estimating it to be somewhere between $ 100, 000-$ 130, 000.

POTENTIAL EXPENDITURE CHANGES IN 2018 BUDGET

The list of expenditure impacts include two types ofpotential impacts/ changes, new expenditures

or services not included in the previous year' s budget, and increases in costs to existing services.We will discuss the changes in new expenditures within this memo and will review the changes

in costs for the existing services during the meeting on Monday.

New Position for MIS department

The City of Chanhassen established the MIS Department in August of 1997 with the hiring of aMIS Coordinator, reporting to the City Manager. This positon was responsible for themaintenance of all city technology, which included all end user, network, andtelecommunications equipment. In May of 2002 a PC Support Technician was added to take oversupport for all end user equipment and to assist with the technical support of the utilitydepartment' s SCADA systems. Since that hiring, the city added the East Water Treatment Plantand relocated the Public Works Facility and Library to new facilities. Each of these locationsincluded new technology to support.

When the first technician was hired, the department was supporting roughly 80 end usercomputers running on 7 physical network servers and 11 network switches. Today the number ofend user computing devices has more than doubled, and the number of servers and networkswitches have nearly tripled. The city has also added new audio visual, video surveillance, accesscontrol, GIS, asset, and document management systems that require additional maintenance and

support. New security threats, mobile devices, training needs and increasing demands for opendata requests are among some of the newer responsibilities for the department.

Staff is requesting consideration for the hiring of a Network Support Technician to assume theresponsibility for the maintenance of all city network equipment. Both technical positions wouldreport to the MIS Coordinator who would continue to be responsible for managing thedepartment, providing support for major software, project management, application integration,staff training and technology policies. The cost to add this position would have roughly a

70,000 impact to the general fund and another$ 23, 000 impact to the city' s Enterprise Funds.These amounts include wage, all insurances, taxes, and retirement costs.

Park & Trail Maps

Every three or four years, the Park and Recreation Department updates the city' s Park and TrailMap for distribution to citizens, visitors, businesses, and Chamber of Commerce organizationsapproximately 12, 000 are made). The city features one of the most comprehensive trail systems

in the State of Minnesota with 75 miles of pedestrian trails, 25 miles of public sidewalks, 13

pedestrian tunnels, and one pedestrian overpass. Our trail system is a signature amenity thatdraws new residents to the community, provides daily access to recreation for those already here,

Mayor& City Council2018 Budget Outlook

February 13, 2017Page 3

and helps maintain our strong quality of life. Property values are preserved and strengthened, inpart, because of the city' s robust trail system.

The Park and Recreation Department has made an intentional decision not to provide

comprehensive trail way findings ( signs) due to the initial cost, visual and physical pollution thathundreds of signs would produce, and the need to maintain signage once installed. Instead, we

rely on the provision of a trail map and the curiosity of people to navigate the trails. We havemaintained a long-term private/public partnership with Bokoo Bikes to produce, pay for, anddistribute these maps. Bokoo Bikes has elected to contribute either$ 2,500 or$ 5, 000 per edition

dependent on the level of their sponsorship budget that particular year. They have indicatedinterest in participating again. The total cost to publish/print and mail these maps isapproximately$ 17,000.

GIS Position now Budgeted at Full Time

During the 2017 budget process, staff discussed with council the need for the GIS position tobecome a full-time position rather than the budgeted amount of 28/ hours per week. This was duein part to the retirement of the employee in the position and, more importantly, the expanding

need for mapping services in all areas, in particular related to the city' s Enterprise Funds.

The position will not be filled until the end of March, thus making it budget neutral for the 2017budget; however, the cost to fully fund the position will need to be included in the 2018 budgetadditional cost is approximately$ 23, 000). As mentioned earlier in this memo, staff is

reviewing a number of employee wages for inclusion in the appropriate fund, this one included.As we proceed in the 2018 budget process and review of those positions, staff is fairly certainthat a majority of the GIS position will now be accounted for within the city' s Enterprise Funds,thus not having an impact on the city' s General Fund.

Other Changes Related to Existing Services

The other remaining changes identified in the attached spreadsheet are related to increased costsin existing services. The amounts included in the spreadsheet are based on a combination ofvery preliminary information and/ or historical trends.

TOTAL IMPACT

If the city council proceeds with all of the new service items listed above, and based on theestimates of the changes in the existing service items, staff is expecting a shortfall of around

50,000. This would result in a preliminary levy larger than new growth, or the need to find areduction in expenditures, or an additional revenue source to fund the changes. Staff will

provide detailed discussion on the 2018 budget with the city council in June, but we lookforward to hearing your thoughts about the information presented this evening.

ATTACHMENTS

1. Spreadsheet of potential budget impacts.

f:\gregs\budget\2018 budget\kfs goal- prelim review of 2018 budget impacts.docx

City of Chanhassen

Analysis of Changes for the 2018 General Fund Budget

Item Fiscal Budget Impact

Increases to General Fund Budget

Wage Increases ( 3%) and other small adjustments for changes in new hires 135, 000)

Police Contract( 4. 5%) 80,000)

Health Insurance ( 15%) 80,000)

New IT Position ( 75% funded by General fund) includes wage and all insurances and taxes 70,000)

GIS Position to begin at Full Time( Large portion of Salary will be Re- Allocated, see below) 23, 000)

Legal Costs for New Development 10,000)

Assessing Contract and New Parcels 10,000)

Increase in General Liab & Work Comp Insurance 15,000)

Park& Trail Maps printed and mailed to residents 17,000)

TOTAL 440,000)

Decreases to General Fund Budget

New Growth ( Estimate at 1. 40%) 151, 132

Debt Levy reducing in 2018 117, 000

Re- Allocation of General Fund Wages to appropriate Enterprise Funds 120, 000

TOTAL 388, 132

Net Needed to Fund Levy with No change in City portion of Property Tax Bill 51, 868)