New Brighton council discusses employee compensation for 2013
Final budgets, levies to be adopted on Dec. 11
During the Nov. 26 City Council work session attended by department heads, New Brighton City Manager Dean Lotter presented updated information on the city’s 2013 budget.
According to Lotter in a Nov. 21 memo to the council, originally the 2013 budget included a tax levy increase of 1.39 percent. All adjustments to date have been captured in the updated budget, and the new levy request would represent a .95 percent increase, or $7,356,400.
In September, the council, with a 3-2 vote, adopted the proposed tax levy for taxes payable in 2013. Mayor Dave Jacobsen and Councilmember Gina Bauman voted in favor of a motion to adopt a zero-percent tax levy increase.
The 2013 preliminary tax levy cannot be increased, but it can be reduced before it is adopted by the council on Dec. 11.
The council has discussed the costs of wages in the city budget at previous meetings. The budget recommended by Lotter accounted for 2 percent cost-of-living adjustment (COLA) and step increases.
Lotter provided reasons to consider supporting the increases, stating that last year the city conducted a study with Springsted to look at the comparability of New Brighton’s compensation plan versus the market or comparable cities.
For non-union, full-time employees, the city’s pay structure was about 9 percent below the market average. With the 2 percent COLA increase and the 2 percent step increase that the council granted in April 2012, assuming other cities didn’t move much, the same group of employees are about 7.5 percent below market, Lotter wrote in his memo.
The city’s pay plan that was adopted 10 years ago established the top-end pay for non-union employees at the midpoint of the market, he explained. The steps for each pay grade were then backed down from the midpoint so that Step 1 of each grade was about 77 percent below the midpoint of the market and comparable positions.
If every non-union employee was at their top step, Lotter wrote, New Brighton’s non-union staff would not be even average or at the midpoint of the market, but below the market midpoint, even though the original intent of the plan was to stay competitive with the midpoint.
Base rate excess tax increment
By no direct action of its own, New Brighton is receiving additional tax dollars due to the convergence of mainly three dynamics – frozen tax rates in tax increment financing (TIF), declining property values, and the Homestead Market Value Exclusion program, Lotter said. The end result in 2012 is that New Brighton will receive about $246,000 more than expected.
In 2013, city staff anticipates receiving $265,000 more than the city levies.
Finance Director Dan Maiers recommends putting the money into the city’s Community Reinvestment Fund, which would help keep the fund healthy so it can help offset the costs of debt in the future, Lotter wrote.
According to Maiers, when the council determines specific purposes for the monies, it is easy to transfer them according to their direction.
Compensation plan
The City Council on Sept. 11 adopted the preliminary tax levy of $7,388,308, which is an increase of 1.39 percent ($101,000) over the 2012 tax levy. Since that time, the council and staff have discussed the budget and made further adjustments that result in a smaller increase. Lotter recommends the 0.95 percent levy increase, which would represent $7,356,400, for 2013.
Councilmember Gina Bauman said she still believes the city can achieve a zero percent levy, and she does not support both a 2 percent COLA increase and a 2 percent step increase.
She said the average salary for 41 city staff, not including union employees, averages about $67,600. Adding a 2 percent COLA increase and a 2 percent step increase gets close to a $70,000 average salary mark.
Bauman said what the city manager and directors make is comparable to others cities, so they are not underpaid regardless of the findings from the Springsted study.
“I still believe that the household incomes in New Brighton do matter. … I’m still looking at it from the perspective of the homeowner in New Brighton,” Bauman said.
Councilmember Mary Burg said she would prefer to give steps because a lot of city employees are younger and newer and should work their way up. She said she thinks it’s a good community investment if the city can keep its budget almost flat while still following the step program.
Mayor Jacobsen said a case could be made for either way, agreeing there are a lot of unknowns at this point. He said that he respects Burg’s point that city staff has done a good job, which he doesn’t deny.
“I don’t know that I can recommend a 2 percent, 2 percent,” Jacobsen said.
Councilmember Burg asked about the council recommending a 1 percent COLA increase and a 1 percent step increase.
“It would throw it all off if you start messing with the actual increments,” Lotter said. “You want to maintain balance through the whole system so we stay compliant with the whole equity.”
Responding to a question from the council, Lotter estimated the city could save about $30-40,000 if no steps were approved.
If the council approved a 2 percent COLA increase, it would represent an approximate $70,000 to $80,000 expenditure, which was included in the budget at the time of the work session.
Lotter said his recommendation is a 2 percent COLA and steps because the budget shows the city can afford it. Also, all the comparable cities that gave no COLAs to non-union employees still gave step increases. Only New Brighton gave no step and no COLA increases for three years.
Burg suggested that the city use the one-time surplus to write off the 0.95 percent levy increase to achieve a zero percent levy and go with the presented budget.
Mayor Jacobsen said he would support a zero-percent tax levy increase, with the remaining excess money going into the Community Reinvestment Fund. He also said he would support a 1 percent increase in COLA with no steps, for which council members expressed support.
The consensus of the council is to put the excess money in the Community Reinvestment Fund.
A budget discussion with public comment was scheduled for 6:30 p.m. Tuesday, Dec. 4, after this edition went to press. The final 2013 budgets and tax levies will be adopted during the council meeting that begins 6:30 p.m. Tuesday, Dec. 11.
