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12-30-08 agenda• CITY OF RICHFIELD, MINNESOTA TUESDAY, DECEMBER 30, 2008 SPECIAL CITY COUNCIL WORKSESSION , CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 6:15 P.M. AGENDA Call to order Roll call 1. Discussion regarding the State of Minnesota projected deficit and addressing its impact on the. City of Richfield 2008-2009 budget Notes: • Adjournment Ye~Yr****~*Ye~kYrk~t*71e k*~*****Yt*~k*~t*****~t7k~~N~ *~k******* SPECIAL CITY COUNCIL MEETING CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order Roll call 1. Council discussion • Report on the impact of the State of Minnesota's projected deficit on the City of Richfield 2008-2009 budget and the actions the City will be taking to address the • budget shortfall • 2. Consideration of resolutions suspending the implementation of resolutions relating to the 2009 Management and General Services salary compensation plans Staff Report No. 321 Notes: 3. Consideration of resolution suspending the implementation of resolution regarding Section 5 of the City Manager's employment agreement, 2009 salary compensation adjustment Staff Report No. 322 • Notes: Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. • AGENDA ITEM # p~. REPORT # ~ p~' ~' STAFF REPORT CITY COUNCIL MEETING DECEMBER 30, 2008 LJ • REPORT PREPARED BY: STEVEN L. DEVICH CITY MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATU REVIEWED BY CITY MANAGER: ITEM FOR COUNCIL CONSIDERATION: Adopting resolutions suspending the implementation of resolutions relating to the 2009 Mana ement and General Services sala com ensation lans. I. RECOMMENDED ACTION: By Motion: Adopt resolutions suspending implementation of the 2009 General Services and Mana ement Sala Com ensation Plans. II. BACKGROUND The State of Minnesota now has a $426 million projected deficit in the current 2008- 2009 biennium. In response to that deficit, Governor Pawlenty has initiated an unallotment of state aid payments to cities for the second half of 2008. For Richfield this means that the City will lose about $619,000 of the scheduled $1,087,000 that was to be received this week. To compound the matter even further, potential state aid cuts to Richfield for 2009 loom even far larger than the $619,000 that the City is losing for 2008. In order to meet the impending budget shortfall that must be addressed for 2009 some swift actions are necessary. One such action is to suspend the 2009 salary adjustments for the General Services (office, clerical & technical) and Management employees that are scheduled. to take effect on January 1, 2009. Suspending these increases at this time will give staff and the City Council more time to consider what actions or adjustments must be made for 2009 to meet~the projected revenue shortfalls to the City. • III. BASIS OF RECOMMENDATION A. POLICY • The City of Richfield has historically given employees that are represented by labor unions and those not represented by unions, such as General Services and Management, the same salary adjustments each year. • If General Services and Management employees are given a particular increase, the City must be prepared to offer the same to groups such as police and fire. B. CRITICAL ISSUES • This action must be taken prior to January 1, 2009. F C. FINANCIAL ` • There is a significant overall financial impact to the City for salary increases for all employee groups. The current situation has made it necessary to further consider these increases in light of the LGA cuts. D. LEGAL • -Salary adjustments for any City employee group must be done by an act of the City Council in the form of a resolution. E. ENVIRONMENTAL CONSIDERATIONS • None IV. ALTERNATIVE RECOMMENDATION(S~ • The City Council could decide to not suspend the scheduled salary adjustments at this time. V. ATTACHMENTS • Resolutions ~~ VI. PRINCIl'AL PARTIES EXPECTED AT MEETING • None • • RESOLUTION NO. RESOLUTION SUSPENDING IMPLEMENTATION OF RESOLUTION NO. 10183, RELATING TO THE 2009 GENERAL SERVICES SALARY COMPENSATION PLAN WHEREAS, the City Council of the City of Richfield adopted Resolution No. 10183 on December 9, 2008, establishing the 2009 General Services Compensation Plan, to be effective as of January 1, 2009; and WHEREAS, the State of Minnesota has projected a deficit of $426 million for the remainder of the 2008-2009 biennium; and WHEREAS, Governor Tim Pawlenty has announced that state aids to cities are being considered for unallotment as a measure to balance the state's budget, which could .include the loss of all or a significant portion of state aid .payment that the City had expected to receive in December 2008; and WHEREAS, the City had expected to receive a state aid payment of $1,087,000 in December; and WHEREAS, the current financial situation of the state and the City. require that the City staff and Council study and analyze available options before implementing pay plan increases. NOW, THEREFORE, BE IT RESOLVED that the City Council hereby suspends the implementation of Resolution No. 10183, pending further review and analysis of the City's financial situation, and while the resolution remains in suspense, General Services employees shall continue to be paid according to the 2008 General Services Compensation Plan approved by the City Council on December 11, 2007. BE IT FURTHER RESOLVED, that the City Council reserves the right to rescind Resolution No. 10183 in its entirety or to modify Resolution No. 10183 by implementing revisions to the 2009 General Services Compensation Plan. BE IT FURTHER RESOLVED, that the City Council announces its present intent that, at such time as the appropriate compensation levels are determined for the 2009 General Services Compensation Plan, the salary rates as provided under that plan shall be put into effect, retroactively, if necessary, as of January 1, 2009; provided, that the City Council also reserves the right to implement changes prospectively only, if the Council deems prospective implementation to be in the best interests of the City. Passed by the City Council of the City of Richfield, Minnesota this 30th day of December 2008. Debbie Goettel Mayor ATTEST: Nancy Gibbs City Clerk • RESOLUTION NO. RESOLUTION SUSPENDING IMPLEMENTATION OF RESOLUTION NO. 10184, RELATING TO THE 2009 MANAGEMENT SALARY COMPENSATION PLAN WHEREAS, the City Council of the City of Richfield adopted Resolution No. 10184 on December 9, 2008, establishing the 2009 Management Compensation Plan, to be effective as of January 1, 2009; and WHEREAS, the State of Minnesota has projected a deficit of $426 million for the remainder of the 2008-2009 biennium; and WHEREAS, Governor Tim Pawlenty has announced that state aids to cities are bein considered for unallotment as a measure to balance the state's budget, which could include the loss of all or a significant portion of state aid payment that the City had expected to receive in December 2008; and WHEREAS, the City had expected to receive a state aid payment of $1,087,000 in December; and WHEREAS, the current financial situation of the state and the City require that the City staff and Council study and analyze available options before implementing pay plan increases.. NOW, THEREFORE, BE IT RESOLVED that the City Council hereby suspends the implementation of Resolution No. 10184, pending further review and analysis of the . City's financial situation, and while the resolution remains in suspense, Management employees shall continue to be paid according to the 2008 Management Compensation Plan approved by the City Council on December 11, 2007. BE IT FURTHER RESOLVED, that the City Council reserves the right to rescind Resolution. No. 10184 in its entirety or to modify Resolution No. 10184 by implementing revisions to the 2009 Management Compensation Plan. BE IT FURTHER RESOLVED, that the City Council announces-its present intent that, at such time as the appropriate compensation levels are determined for the 2009 Management Compensation Plan, the salary rates as provided under that plan shall be put into effect, retroactively, if necessary, as of January 1, 2009; provided, that the City Council also reserves the right to implement changes prospectively only, if the Council deems prospective implementation to be in the best interests of the City. Passed by the City Council of the City of Richfield, Minnesota this 30th day of December 2008. Debbie Goettel Mayor ATTEST: Nancy Gibbs City Clerk AGENDA ITEM # ~, REPORT # ~~ ~- STAFF REPORT CITY COUNCIL MEETING DECEMBER 30, 2008 - REPORT PREPARED BY: NAME, TITLE • • DEPARTMENT DIItECTOR REVIEW: REVIEWED BY CITY MANAGER: STEVEN L. DEVICH CITY MANAGER Q' SIGNATURE ITEM FOR COUNCIL CONSIDERATION: Adopting resolution suspending the implementation of resolution regarding Section 5 of the Cit Mana er's em to ment a reement, 2009 sala com ensation ad~ustment. I. RECOMMENDED ACTION: By Motion: Adopt resolution suspending implementation of the City Manager's 2009 salary compensation adjustment (City Manager's em to ment a reement, Section 5 . II. BACKGROUND The State of Minnesota now has a $426 million projected deficit in the current 2008- . 2009 biennium. In response to that deficit, Governor Pawlenty has initiated an unallotment of state aid payments to cities for the second half of 2008. For Richfield this means that the City will lose about $619,000 of the scheduled $1,087,000 that was to be received this week. To compound the matter even further, potential state aid cuts to Richfield for 2009 loom even far larger than the $619,000 that the City is losing for 2008. In order to meet the impending budget shortfall that must be addressed for 2009 some swift actions are necessary. One such action is to suspend the 2009 salary adjustments for the General Services (office, clerical & technical) and Management employees that are scheduled to take effect on January 1, 2009. Suspending these increases at this time will give staff and the City Council more time to consider what actions or adjustments must be made for 2009 to meet the projected revenue shortfalls to the • City. If the City Council suspends the salary adjustment of the Management and General Services pay plans for 2009,- then the Council should also consider the suspension of the City Manager's pending pay increase for 2009. III. BASIS OF RECOMMENDATION A. POLICY • The City of Richfield has historically given employees that are represented by labor unions and those not represented by unions, such as General Services and Management, the same salary adjustments each year. The City Manager's annual salary increase also follows the same salary adjustment pattern. • If General Services and Management pay plans are suspended, the City should also consider the same action for the City Managers pay adjustment. B. CRITICAL ISSUES • This action must be taken prior to the second Council meeting in February 2009. . • To be consistent, the action for the City Manger should be done at the same time any such action is done for the General Services and Management employees. C. FINANCIAL • There is a significant overall financial impact to the City for salary increases for all employee groups. The current situation has made it necessary to further consider these increases in light of the LGA cuts. D. LEGAL • Salary adjustments for the City Manager must be done by an act of the City Council in the form of a resolution. E. ENVIRONMENTAL CONSIISERATIONS • None. IV. ALTERNATIVE RECOMMENDATION~S~ • The City Council could decide to not suspend the scheduled salary adjustment at this time. V. ATTACHMENTS • Resolution VI. PRINCIl'AL PARTIES EXPECTED AT MEETING • None. RESOLUTION NO. RESOLUTION SUSPENDING IMPLEMENTATION OF RESOLUTION NO. 10171 WITH RESPECT ONLY TO THE AMENDMENT OF SECTION 5 OF THE CITY MANAGER'S EMPLOYMENT AGREEMENT WHEREAS, the City Council of the City of Richfield adopted Resolution No. 10171 on December 9, 2008, amending sections 5 and 11 of the City Manager's employment agreement, to be effective as of January 1,2009; and WHEREAS, the Section 5 of the City Manager's employment agreement establishes the annual salary of the City Manager; and WHEREAS, the State of Minnesota has projected a deficit of $426 million for the remainder of the 2008-2009 biennium; and WHEREAS, Governor Tim Pawlenty has announced that state aids to cities are being considered for unallotment as a measure to balance the state's budget, which could include the loss of all or a significant portion of state aid payment that the City had expected to receive in December 2008; and • WHEREAS, the City had expected to receive a state aid payment of $1,087,000 in December; and WHEREAS, the current financial situation of the state and the City require that the City staff and Council study and analyze available options before implementing pay plan increases. NOW, THEREFORE, BE IT RESOLVED that the City Council hereby suspends the implementation of Resolution No. 10171, with respect only to section 5 of the City Manager's employment agreement, pending further review and analysis of the City's financial situation, and while the resolution remains in suspense, the City Manager shall continue to be paid his salary at the rate approved by the City Council on March 25, 2008. BE IT FURTHER RESOLVED, that the City Council reserves the right to modify Resolution No. 10171 by either removing any amendment to section 5 of the City Manager's employment agreement or by revising said section 5. BE IT FURTHER RESOLVED, that the provisions of Resolution No. 10171 relating to section 11 (health insurance contribution) of the City Manager's employment agreement shall be implemented as of January 1, 2009. BE IT FURTHER RESOLVED, that the City Council announces its present intent that, at such time as the appropriate compensation levels are determined for City employees for 2009, any change to the salary of the City Manager shall be-put into effect, retroactively, if necessary, as of February 24, 2009; provided, that the City Council also reserves the right to implement changes prospectively only, if the Council deems prospective implementation to be in the best interests of the City. Passed by the City Council of the City of Richfield, Minnesota this 30th day of December 2008. Debbie Goettel Mayor ATTEST: Nancy Gibbs City Clerk • r: