This transcript follows the dialogue of the North St. Paul City Council workshop. Please note that while your context list mentions Council Members Woods and McKenzie, the transcript identifies participants as **Council Member Cole** and **Council Member Wong**. Additionally, the speaker introduced as the Finance Director is **Dan Winnick**, rather than Jason Zimmerman. [00:00] **Mayor Monge:** All right, it's 5:16. We can call the workshop to order. Roll call, please. [00:05] **Jennie Kloos:** Council Member Cole? [00:06] **Council Member Cole:** Here. [00:07] **Jennie Kloos:** Council Member Schweer? [00:08] **Council Member Schweer:** Here. [00:09] **Jennie Kloos:** Council Member Wong? [00:10] **Council Member Wong:** Here. [00:11] **Jennie Kloos:** Council Member Nordby? [00:12] **Council Member Nordby:** Here. [00:13] **Jennie Kloos:** Mayor Monge? [00:14] **Mayor Monge:** Here. Can I get a motion to adopt the agenda, please? [00:16] **Council Member Schweer:** So moved. [00:17] **Mayor Monge:** Council Member Schweer. Second? [00:18] **Council Member Nordby:** Second. [00:19] **Mayor Monge:** Council Member Nordby. All those in favor say aye. [00:20] **Council (In Unison):** Aye. [00:21] **Mayor Monge:** Thank you. Topics? [00:22] **Brian Frandle:** Thank you, Mayor. One topic on the agenda for this evening: it is the 2025 budget and levy discussion. I’ll turn that over to our Finance Director, Dan Winnick. [00:30] **Dan Winnick:** Mayor, council members, good evening. So we had a pre-budget kickoff meeting; we've heard from all the department heads, and now it's your opportunity to really look at all of the information that's been presented to you up to date. I'll walk through stuff here with a PowerPoint. It’s for you to kind of set where you want to be at with that maximum levy. Again, the maximum levy needs to be certified, so tonight I need to get that direction so we can get all the resolutions prepared for September 17th so we can certify it to Ramsey County. It’s a maximum levy; what that means is that we can't go up, but we certainly can drop the levy down before we make our final approval in December. Right now, we're scheduled—I think the second meeting in December is when we would have final approval of the 2025 budget and all of the documents associated with that. So, I’ll walk you through where we're at. Tonight we're going to cover the budget calendar, the proposed levy, property tax impact, the general fund budget, the proposed HRA and EDA levies, some budget options, and some unknowns that could face our decision here tonight. Then we'll open it up for discussion. You can interrupt me at any point in time and ask any questions. You've been handed out three additional pages. There's never any stop in looking at the budget and trying to come up with ways to reduce the levy and the impact it has on our residents. Brian and I have thoroughly discussed some other options, some of the options that we've already presented before, and a couple of new ones that we feel pretty comfortable in trying to get that levy down. [Dan continues through the budget calendar and data analysis...] Right now where we're at, when we combine the City, the HRA, and the EDA, we're at a 9.88% levy increase. That City levy component is 9.62% of that increase. If you remember our pre-budget meeting, we were looking at about a 7.6% estimated levy increase. A number of things have changed. Why the increase is there is a different cost-of-living increase that's currently in your budget. Later on tonight, you'll have an executive session where you'll be informed by the City Manager and the City Attorney of where they're at with union negotiations. I got to caution you that it may be more than what we have in the budget, and so that's where we want to be a little cautious on how low we go on this maximum levy because we can't go back up. [Dan continues discussing fiscal disparities and the homestead market value exclusion...] [11:20] **Mayor Monge:** I do appreciate you with what you presented here to us today. What are your assumptions built into this with the inter-funds for rates? Are there any changes assumed with this budget? [11:32] **Dan Winnick:** I think the only one right now for enterprise rates is surface water, and I've gotten it down to a 2.5% rate increase versus where we were at 4.5% prior. Yet, when we get into the enterprise funds, we'll show you the financial plans and it's not a pretty picture. There's going to be rate increases that are going to be needed in the future years. To buy a lot of this down, I was only focusing on the penalty and investment interest in the electric fund and not in the other utilities. [12:35] **Council Member Nordby:** Help me out here—you're the expert. If we transfer penalty money from the enterprise fund to the general fund and then do a rate increase, doesn't that hurt tax disparity? Or wouldn't it be better for the average citizen to transfer the penalty money to a different enterprise fund to keep the rate lower and thus keep our tax parity higher overall? Wouldn't that be a net win for the resident? [13:02] **Dan Winnick:** It certainly will. Absolutely. The question that comes into mind is how high of a tax rate do we get to? We're second highest behind St. Paul. That property tax has a huge impact. It’s hard—it’s not based upon use, where a utility is based upon your usage. I will say yes, you're absolutely right: the higher the rate, the better we'll do in fiscal disparities. That's kind of why I want to defer that decision until we go through the enterprise funds. [14:15] **Council Member Wong:** Dan, when I was looking through with the enterprise fund, was there one called—I was trying to find a "gravel"... what is that? [14:25] **Dan Winnick:** We get a small amount of aggregate tax. It's only about 300 and some dollars in there. It’s an in-lieu-of property tax payment for aggregate. We don't have a lot of it, but it’s based upon established deposits. [14:58] **Council Member Wong:** I know some cities were doing a fund for roads out of an enterprise thing like that too—I don't know if that's a percentage or something off of... I forget what kind of fund that is. Franchise? [15:15] **Dan Winnick:** Yeah, we do get franchise fees from gas, electric, and Comcast. For the most part, it is already collected within the general fund, and then there's a portion of it that's used in our building fund. [15:30] **Council Member Schweer:** Dan, can you speak a little bit to, if you know, what Ramsey County is thinking in terms of their percentage? [15:38] **Dan Winnick:** They're in a two-year budget cycle. I think they've already set theirs. Last year I thought, if my recall is correct, I think it's either 5.7 or 5.9, which is higher than it has been in the past few years for them. [15:54] **Council Member Schweer:** A lot to do with labor as well, I imagine. [15:57] **Dan Winnick:** Yeah, they did give some one-time bonuses during the COVID period that were incorporated into their negotiations. [Dan transitions back to the recommendation slide]. So, tonight, what needs to occur is we need your direction on this maximum levy. Our city manager and myself recommend taking out the downtown manual update ($60k), the HRA levy, and reducing the street levy from 3.5% to 3.25%. That brings the maximum levy to 8%. However, I'm not touching the park/building increase or the penalty income yet to leave a buffer for unknowns like the union negotiations. [19:05] **Council Member Nordby:** I guess I have one more question. Let's say we were all up here very happy with the 8% you could get us to. How much would you recommend as a buffer right now because we don't know about the union negotiation contracts? If we set the final at 10% hoping you could get to 8%, is that 2% enough of a buffer in your mind? [19:35] **Dan Winnick:** I think it should be. I also think you have a buffer here by using those penalties. [19:55] **Council Member Schweer:** And I think it's important that we look at the 2% dedicated to the CIP for 1% parks and 1% for the buildings. Parks hasn't come and presented anything yet. We heard the HGA presentation last week, and there were a lot of "aha" moments. I still think that from my perspective we look at that 2%, but I don't necessarily think that it needs to be 2% specifically for buildings and 1% for parks. I do believe those can be brought down. [20:30] **Mayor Monge:** I also want to thank you for the streets. I see they're taking care of Margaret now; we're getting somewhere. Since I've been mayor, some of the biggest issues we've had are our streets. I'm very happy that we're working our way back, and I want to keep that momentum going. That little bit of a cut to go from 3.5 to 3.25—we're still nowhere near what we need to keep our streets up. Is that a correct statement? [21:05] **Dan Winnick:** I'm not the expert that can answer that, but I can't say anything differently. Part of when we go through that CIP, we're going to have Morgan there to give more information. I do want to give a shout-out to Ron and Randy with the Public Works department. They are the ones who have to deal with all of these road projects. They just do an excellent job. [22:00] **Mayor Monge:** I just like seeing us going in the right direction because that's the biggest thing for the city. [22:05] **Dan Winnick:** Yep, we just got to keep the momentum up. We're moving in the right direction. I'm comfortable with wherever you want to go. Remember, we set the maximum; we can always come back down. [23:05] **Mayor Monge:** Should we just go around and talk numbers? Do you mind starting us, Jason? [23:10] **Council Member Nordby:** My number would be at 10%, hoping we're close to that 8%, but to me, we set it at 10 without knowing what the union talks are going to be. That would be my number. [23:25] **Council Member Wong:** I'll go even 10 as well. Thank you. [23:28] **Council Member Schweer:** Actually, I'm going to go a little bit higher and do 10.25%. I say that because I would like to see us not decrease on the street and remain the same. I'd like to revisit this parks and buildings and raise it higher with the 2% that's there, knowing that we can play with it and move it. We can always go down; we can't go back up. [23:55] **Council Member Cole:** Yeah, I don't think we need to be that high. My number would come in at probably about 8.5%. [24:05] **Mayor Monge:** Well, I don't disagree. I'd go with 10 with the other two, then. Or, sorry, I'm not very good with math here. 10 it is. [24:15] **Council Member Cole:** I'm not in alignment, but that's for the maximum. Because we still have to face the residents and tell them it's going to be 10%, and if we come down at 8%, does it look like we're doing our job? [24:28] **Council Member Nordby:** I guess I have one more question. How tonight works: we go into a closed session, then we go back into an open session and adjourn, right? Are we able to give Dan a number after the closed session before we adjourn? Because negotiations are still going on, we can't give anybody numbers yet, right? [24:55] **Brian Frandle:** Correct. We just got the first ask, and now it has to be negotiated on our side with their side. [25:10] **Mayor Monge:** And that's where it would be then. Council Member Cole, your number was again? [25:15] **Council Member Cole:** I want 8.5%. Why? Because I think that there's room in the budget. I have a list of items that would generate revenue for the city that would be able to bring the number down. [25:35] **Mayor Monge:** When do we hear that from you? [25:38] **Council Member Cole:** Down the road. I'm still working with staff to gain some numbers. [25:45] **Council Member Nordby:** One last shot—I'm happy to change my number to 9.88% rather than 10%. I appreciate you bringing up that Truth and Taxation notice. That number can be a sticker shock for some individuals when they see it. [26:05] **Mayor Monge:** 9.88% it is. All right, I'm comfortable. We'll go with it. Everybody's going to sharpen the pencils and do the best they can to get down. [26:35] **Dan Winnick:** I thank you very much. I know this is tough. We still have a long way to go. The CIP is going to be a big one. [27:00] **Mayor Monge:** I'd love to get a number someday what the Emerald Ash Borer has cost us overall. Just because, I mean, it's just their trees and who knew 10 years ago that was going to turn on you and how much money that costs as an unplanned thing. [27:15] **Brian Frandle:** I'll have a bit of an update later in the meeting. [27:17] **Mayor Monge:** Thank you, Dan. Appreciate it. All right, that is done. Any other business? If nothing else, I ask for adjournment, please. [27:25] **Council Member Cole:** So moved. [27:26] **Mayor Monge:** Council Member Cole. Second? [27:27] **Council Member Wong:** Second. [27:28] **Mayor Monge:** Council Member Wong. All those in favor say aye. [27:29] **Council (In Unison):** Aye. [27:30] **Mayor Monge:** Thank you. Which Wong? That's why I did it, to prove that I could say the right one.