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HomeMy WebLinkAbout2026/08/03 - ADMIN - Minutes - City Council - Study SessionOfficial minutes Special study session St. Louis Park, Minnesota August 3, 2026 The meeting convened at 6:41 p.m. Council Members present: Daniel Bashore, Jim Engelking, Sue Budd, Tim Brausen, Paul Baudhuin, Yolanda Farris, Mayor Nadia Mohamed Council Members absent: none Staff present: police lieutenant (Mr. Barnes), community development director (Ms. Barton), administrative services director (Ms. Brodeen), police lieutenant (Mr. Blomsness), facilities superintendent (Mr. Eisold), recreation superintendent (Ms. Friederich), police lieutenant (Mr. Hagen), public works director (Mr. Hall), fire chief (Mr. Hanlin), engineering director (Ms. Heiser), city manager (Ms. Keller), city attorney (Mr. Mattick), deputy chief of police (Mr. Nadem), finance director (Ms. Stephens), city clerk (Ms. Kennedy), deputy city clerk (Ms. Scott- Lerdal), communications and technology director (Ms. Smith), parks superintendent (Mr. Umphrey), deputy city manager (Ms. Walsh), human resources director (Mr. Vorpahl) Discussion Item 1. 2027 Base & Operating budget discussion Ms. Keller thanked the department directors, managers and finance staff for their work in preparing the recommended budget. She outlined the framework she used to evaluate proposals: whether a request was in response to something that is mandated, whether a cost was already being borne by the organization without a corresponding budget, whether it advanced a strategic priority and whether it improved public service or organizational effectiveness. Ms. Keller noted these were balanced against organizational and fiscal capacity as well as council feedback received earlier in the process around maintaining excellent services while minimizing levy impacts. She emphasized that all figures presented were point-in-time and would continue to shift through the fall. Ms. Keller introduced Ms. Stephens, finance director. Ms. Stephens explained the policy consideration before the council was whether to support moving forward with the 2027 general fund budget recommendations. Ms. Stephens reviewed the full budget calendar: • July 20, 2026 was a special study session presentation that covered the 2025 Annual Comprehensive Financial Report. • Aug. 3, 2026 – this evening’s discussion covers the proposed general fund budget including expenses, revenues and new operating requests. • Aug. 17, 2026 - the council will hold a public hearing for 2027 city fees and also hold a study session discussion on utility rates. • Sept. 8, 2026 – the council will hold a discussion on the Capital Improvements Plan (CIP) and other funds to produce a final levy estimate. • Sept. 22, 2026 - the council must adopt the maximum levy. Docusign Envelope ID: 6804E086-9982-837E-81C5-204399800EAE Special study session minutes - 2 - August 3, 2026 • Oct. 12, 2026 – the Tax Increment Financing (TIF) management plan update will be presented. • Nov. 16, 2026 - any budget revisions will be returned to council. • Dec. 7, 2026 - the public hearing for Truth-in-Taxation hearing will be held. • Dec. 14, 2026 – the council must adopt the final budget for 2027. Ms. Stephens noted that informal council feedback received in spring 2026 shaped the budget development process. That feedback emphasized balancing service levels with levy impacts, identifying cost efficiencies and preserving flexibility for emerging needs. Ms. Stephens presented the non-personnel operating comparison across all general fund departments: administrative services, communications and technology, community development/building and energy, engineering, fire, parks and recreation, police and public works. The overall year-over-year increase was 0.7%. She explained that the -12% variance in administrative services reflected a reallocation of legal service invoices to the police department and a $50,000 social service programming budget to community development, in both cases moving budgets to the departments actually overseeing the work. The -7% variance in communications and technology reflected items still being transitioned into the technology fund. Community development and building and energy were consolidated under a single umbrella for 2027, and the 13% increase shown in police largely reflected the administrative services reallocation rather than new spending. Ms. Keller clarified that this slide did not include personnel costs, covering only operational items such as supplies, contracts and consultant fees. Council Member Engelking observed that holding costs nearly flat across departments in a rising-cost environment demonstrated significant fiscal discipline. Ms. Keller noted that the 2025 audit had left an unallocated cash balance of approximately $160,000 — a meaningful reduction from prior years — and emphasized that some buffer remained necessary given the variance inherent in a general fund budget of more than $50 million. Ms. Stephens reported a projected 4.5% increase in personnel costs, primarily reflecting salary adjustments and normal compensation increases. Benefits were projected to decrease slightly due to favorable contract negotiations, not reductions to employee benefits. Council Member Brausen asked who was responsible for the health benefits contract negotiations, noting that the city had secured an 11% increase two years earlier when others saw 20% increases, and was now projecting a decrease in costs. Ms. Keller credited Ms. Vorpahl, who negotiates on behalf of the city with the assistance of a benefits broker. Ms. Stephens presented 2027 one-time spending requests that would be funded entirely through 2026 savings from vacant positions and programming changes, with no levy impact. These included: • a wellness committee initiative under administrative services; Docusign Envelope ID: 6804E086-9982-837E-81C5-204399800EAE Special study session minutes - 3 - August 3, 2026 • digital accessibility compliance support, data streamlining and governance and a network and security administrator under communications and technology; • a comprehensive plan update and climate action plan amendment under community development; • an HVAC controls update through facilities; • and a citywide strategic plan project implementation fund. Council Member Budd asked about the strategic plan line item and whether the cost was comparable to prior cycles. Ms. Keller explained that the city conducts visioning every 10 years but will update the strategic plan approximately every three years. She noted that staff had been working for several months on goals and strategies for the upcoming three-year period and that the budget requested is anticipated to cover consultant fees and one-time implementation costs. She expected to return in a future year with more refined needs that could include staffing or other expenses. Ms. Stephens walked through each department's ongoing spending recommendations. Under Administrative Services, she presented background checks through a third-party vendor to replace the current police department dispatch process, which lacks access to all states, preventing complete out-of-state applicant checks. She also presented an ergonomics budget to fund chair replacements across the city and a wellness committee ongoing allocation. Under communications and technology, she presented a Copilot generative Artificial Intelligence (AI) license covering approximately half of the city's full-time employees, intended to standardize and secure AI tool use across the organization. She also presented password management software to consolidate staff onto a single secure platform, the ongoing cost for the network and security administrator position (with the one-time startup cost funded separately through 2026 savings) and an accessibility tools budget to formalize an existing closed captioning expenditure that had not previously been budgeted. Ms. Keller noted that the network and security administrator was planned as a mid-year hire, meaning the 2027 cost would be partial. The full-year ongoing cost in 2028 would be $175,000, partially offset by reduced vendor costs. Under community development, Ms. Stephens presented funding for a housing intern. Council Member Budd expressed support for the housing intern position and asked whether it would remain an intern role on an ongoing basis. Ms. Barton confirmed that for the foreseeable future, the position would remain an internship, noting that the administrative reimbursement from the “Bring It Home” voucher program was unlikely to increase significantly. An intern could also effectively serve as a housing navigator, helping residents understand city programs and connecting them with county, St. Louis Park Emergency Program (STEP) or state resources. Council Member Brausen asked whether the role would be year-round part time. Ms. Barton confirmed it would be approximately 20 hours per week throughout the year. Docusign Envelope ID: 6804E086-9982-837E-81C5-204399800EAE Special study session minutes - 4 - August 3, 2026 Under parks and recreation and facilities, Ms. Stephens presented a temporary staffing salary budget for facilities to reduce overtime during peak periods and a position reclassification from custodian to Public Service Worker to better meet current operational demands. Under police, Ms. Stephens presented two items: reinstating two sworn officer positions that had been converted to civilian roles earlier in the year, and an increase to the Community Service Officer (CSO) budget to expand the officer pipeline. Council Member Farris asked how the sworn officer proposals related to earlier commitments made to the police department regarding staffing. Mayor Mohamed recalled that the earlier conversation involved converting two positions to civilian roles with the intent to eventually restore sworn officer funding and noted that facility improvements discussed at that time were not part of this budget. Ms. Keller confirmed the 2027 proposal would restore the sworn complement to where it stood at the start of 2026 while retaining the two new civilian positions and would also expand CSO capacity. Council Member Budd asked whether the department was short-staffed by more than these two officers. Mr. Nadem responded that current sworn staffing stood at 57, that the department was in a hiring process aimed at reaching full strength of 60. Adding the two proposed positions would bring the authorized complement to 62 as of Jan. 1, 2027. Council Member Baudhuin noted he had understood the shortage to be larger than three officers. Ms. Keller clarified the distinction between officers hired and officers available to work, noting that medical, military and other leaves created a larger on-the-ground shortage than the authorized headcount reflected. Council Member Brausen asked whether the additional hiring would fully address the shortage. Mr. Nadem acknowledged the department would still be short-staffed. Ms. Keller stated that the primary near-term goal was to move off emergency staffing protocols. She described the CSO pipeline as the key mechanism for matching new officers with vacancies over time. Council Member Brausen noted that even if the department were fully staffed, they might face challenges finding enough qualified candidates to fill all roles. He expressed support for continued investment in officer staffing to avoid burnout. Council Member Farris emphasized the importance of supporting officers and ensuring they were not overextended. Council Member Baudhuin asked how long the department had been operating on emergency staffing. Ms. Keller indicated it had been since approximately December 2025; confirmed by Mr. Nadem. Docusign Envelope ID: 6804E086-9982-837E-81C5-204399800EAE Special study session minutes - 5 - August 3, 2026 Council Member Budd asked whether the CSO program typically ran 18 months. Mr. Nadem said the timeframe varied — some participants were near-graduates while others might not yet hold a two-year degree, putting them in the program for up to 24 months. Ms. Keller noted that the program could run up to four years depending on degree pursuit, but that most participants completed it faster than that. Council Member Budd referenced earlier concerns about officers leaving after the city invested in them and asked whether that applied to the CSO program. Mr. Nadem clarified that the attrition issue had been with the Pathway to Policing program, not with CSOs. He noted that 44% of current staff were former CSO cadets, including himself, and that CSOs demonstrated strong retention and cultural alignment with the department. Ms. Keller added that the Pathway to Policing program had previously relied on outside funding that had since dried up, making CSOs the more cost-effective pipeline. Ms. Stephens reported that total new ongoing allocations across all departments reached just under $714,000. After applying anticipated 2026 savings the net new ongoing general fund spending for 2027 was just under $395,000, representing approximately a 0.6% levy increase. Ms. Keller noted that because she had authorization over personnel dollars, she was sharing all three new roles for transparency. The net addition to the city - and the ultimate request - is for one new position. Ms. Stephens summarized the levy trajectory. The base budget increase for 2027 was approximately 5.85%. The proposed ongoing spending additions contributed approximately 0.6%. The upcoming discussion of the CIP, climate investment fund and other special funds on Sept. 8, 2026, would refine the total, culminating in the proposed maximum levy to be adopted on Sept. 22, 2026. Council Member Baudhuin asked whether staff foresaw any surprises that could drive the levy higher, as had occurred the prior year. Ms. Stephens noted that debt service had increased slightly more than expected, but that departments had offset that through careful budget management, allowing the 5.85% base to hold. Ms. Keller flagged the climate investment fund as a potential significant variable in the September 2026 discussion, noting the city had been drawing down seed money as programs matured. A sustainable ongoing funding source would need to be established to fund the work. The said that staff was working smooth the transition for the levy. Council Member Engelking asked whether commercial real estate had bottomed out and whether less of the levy burden would shift to residential property owners than in the prior year. Ms. Stephens indicated the shift would likely be smaller. Ms. Keller noted the city would have more clarity in mid-September 2026 when the county released market valuation data. She expressed hope those numbers would be available before the Sept. 22, 2026, maximum levy adoption. Docusign Envelope ID: 6804E086-9982-837E-81C5-204399800EAE Special study session minutes - 6 - August 3, 2026 Council Member Brausen expressed support for the budget overall and stated his desire to see greater investment in the climate investment fund, acknowledging that would need to be weighed against levy impact. Mayor Mohamed commended staff for integrating strategic priorities into budget requests in a way that made each investment easier to explain to residents. She highlighted the digital accessibility work as a strong example of the city's commitment to welcoming and accessible government. Council Member Baudhuin and Council Member Brausen both acknowledged the difficulty of balancing resident expectations around taxes with the cost of maintaining valued city services, and thanked staff for their responsiveness to council direction. Council Member Budd observed that residents both valued city services and rebuffed tax increases, making the balance inherently challenging. Council Member Baudhuin suggested that the city produce a chart or annual report showing grants received and other outside revenue sources to help residents understand the full picture of how the city funds its work. Ms. Keller confirmed staff was preparing an annual grants report showing all grants applied for and awarded. Council Member Budd added that the city's grants program was a significant contributor to the financial bottom line and that staff deserved recognition for that work. Council Member Engelking asked whether any TIF districts were eligible for decertification at year-end. Ms. Barton confirmed a small number were eligible. She pointed out a full discussion on this topic would take place during a TIF management plan presentation on Oct. 12, 2026. Ms. Keller noted the districts did not appear to be large and that any decertification decision would have a limited levy impact. Mayor Mohamed closed the discussion, noting that no decisions were required and that council feedback would inform the next phase of the budget process. She congratulated Ms. Stephens on her appointment to finance director. The meeting adjourned at 7:22 p.m. ______________________________________ ______________________________________ Melissa Kennedy, city clerk Nadia Mohamed, mayor These minutes were created with the assistance of a generative AI transcript service, then edited and finalized by a city staff person. Docusign Envelope ID: 6804E086-9982-837E-81C5-204399800EAE