City will cut hours, positions to make ends meet
With shorter summer hours at city hall and cuts to summer staffing levels the city of Farmington is turning to its employees to help make ends meet.
Farmington city staff will take a cumulative $100,000 in pay cuts to help the city's budget this summer, but even that will not be enough to erase a projected $350,000 budget shortfall this year.
On Monday, the city council approved $212,600 in reductions to address a deficit expected to arise because Farmington will not receive its annual Market Value Homestead Credit from the state of Minnesota.
There is another option -- one no council member wants to pursue -- that could balance the budget and put Farmington in a secure spot in the event the MVHC is cut in 2010, as well. That option is to assess franchise fees to the electric and gas companies, which would create another $62,400 in income this year, and to charge every property owner for streetlight utility, raising another $75,000.
Those franchise fees would likely come back to taxpayers, most likely in the form of increases on their monthly bills.
Cuts in place
The decisions council members made Monday will mean some changes to city services.
First, since the operation of the Apple Valley-Lakeville-Farmington Ambulance Service has been taken over by Allina Health Systems, the city no longer has to pay its annual contribution to ALF. That means a savings of $12,400 right off the bat.
Then, council members chose not to make the city's $70,2000 contribution to the fire levy. The city makes a contribution each year, but finance director Robin Roland said the state auditor's office has indicated no contribution is necessary in 2009. The city has been required to contribute $199,297, but over the last 13 years, has contributed $710,200. This will be a one-time change.
Additionally, the city cut $30,000 worth of seasonal staff positions from this year's budget. The city will cut its summer staff at least in half. The eliminated positions, mostly in parks maintenance and street maintenance, mean it might take a little longer to clean the streets after a wind storm or to cut the grass in city parks.
Those cuts do not affect anyone currently working for the city.
Seasonal recreation staff positions have not been cut, Roland said, because doing so would reduce the number of revenue-generating programs the city could offer this summer.
The biggest piece of the city's cuts, though are a result of keeping city hall open only 36 hours a week for 12 weeks over the summer. That means employees will only work 36 hours instead of their regular 40. Exempt employees, like department directors and city administrator Peter Herlofsky, will take 2 1/2 percent pay cuts during the same period of time. All told, the move creates $100,000 in budget savings.
"We're trying to be forward thinking but yet save ourselves some money," Roland said."It's not a perfect solution but it's a palatable solution."
The only city personnel whose hours will not be cut will are police officers and full-time employees who work for the city's two liquor stores. The reason for the latter, Roland said, is that the liquor store is a retail operation, and money from liquor operations goes to supplement other budgets within the city.
Council members objected to the idea of assessing fees to the gas and electric franchises and to have all property owners help pay to light Farmington. City staff suggested last month those might be the most effective ways of meeting budget needs without laying off more staff or hurting city services.
Paying for streetlights costs about $175,000 a year. Communities including Apple Valley, Lakeville and Burnsville ask their residents and businesses to help pay for those utilities, but Farmington does not.
Farmington's proposal was to charge residents and businesses $2.50 per month for street lighting. The city would begin charging those amounts July 1, halfway through the year. The move would generate $75,000 by the end of 2009. On the assumption the MVHC will be cut next year as well, the streetlight utility fees would continue in 2010, generating $150,000 and significantly cutting the city's general fund expenditures.
Gas and electric companies run their lines through the city's right-of-way, enabling the city, if it chooses, to assess a fee to those utilities. At present, the city assesses a fee to cable franchises, but not to gas and electric.
However, two payment structures laid out for council consideration would mean anywhere from 75 cents to $2.50 would be passed on to residential taxpayers each month; small commercial and industrial customers would see an increase of $12.60 to $38; larger commercial and industrial customers could see as much as $218 in additional fees monthly. That is because the utility companies would likely pass along to customers the additional fees the city requests for right-of-way use.
But those franchise fees could solve big headaches for city staff. From July 1 through the end of the year, those fees could generate as much as $62,400. In 2010, that could mean as much as $180,000, between the gas and electric fees.
Cuts yes, fees no
Roland said she knows the fees charged for gas and electric service will come back on the taxpayer.
"We're not sugar-coating this. We know what it is," she told council members Monday. "But this is our best shot at a budget correction."
Still, most council members do not want to go down that path. Council members directed Roland and city staff to find additional cuts -- most likely in the form of two or three employees -- to consider before implementing the fees. However, they gave no indication of which services or positions they would like to see gone.
Herlofsky urged council members to use caution when it comes to cutting positions though, because cutting staff this year will not address the shortfall that is likely to come in 2010. And, he said, once those positions are gone, it will likely be three to four years before they can be filled again.
Only council member Christy Jo Fogarty acknowledged the fees would be helpful to the city's financial situation.
"No on has ever been in favor of raising taxes, but there's really no other way," she said.
Council members gave city staff a week to come up with more options. The budget is on the agenda for the March 9 city council workshop, scheduled for 6:30 p.m., at Farmington City Hall.