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December 11,2012 Page 4 of 8 City Manager Lotter clarified the proposed wage compensation for 2013. He reviewed a presentation and discussed the keys to a successful compensation plan for non-union employees. His goal was to attract and retain quality personnel for New Brighton. He encouraged the Council to keep the pay scales competitive in order to preserve the superior staff at the City. He understood that things have changed economically in the last 10 years and pay rates were sliding. City Manager Lotter explained the City has been successful in keeping the tax levies flat for several years. He discussed the pay structure in further detail noting based on performance evaluations the City Manager can withhold step increases or COLAs to augment a performance issue. Staff further reviewed the Springsted Compensation Study. He clarified that when a compensation study was completed 10 years ago by Springsted,non-union staff was approximately 9.77%below the midpoint when compared to comparable cities. The union employees were aligned with the midpoint of comparable cities. City Manager Lotter stated in 2005,New Brighton was within 2-3%of the midpoint. He commented that the budget currently reflects a 1%COLA with no step increase. However,he recommended the Council consider a 2%COLA with step increases. This would be a$61,800 expense, which was achievable. Another option would be to propose a 2%COLA with no steps which would cost $39,000. He commented another alternative would be to provide a 1%COLA and steps,which would be an additional$22,000. City Manager Lotter encouraged the Council to consider how to measure success for the City. He noted comparable cities spend 64%on employees and in New Brighton,the City spends 61.3%. To him this was a success. He discussed the tax levy per capita,which was another measure to be celebrated in New Brighton,as the City was the 8th lowest. He reported that New Brighton offers superior results because of its superior Staff. He encouraged the Council to reconsider the pay and step increases for non-union employees. Councilmember Bauman commented she was surprised by the presentation made by Staff this evening as the Council has previously discussed this matter. She stated the Council had already made a decision on this issue. She was offended that these statements were made in response to the comments she made last Monday. It was her opinion that a$68,000 salary was not a hardship. She commented that this issue had already been hashed out between Staff and the Council and did not see the need for this to be reconsidered this evening. City Manager Lotter stated he would be happy to implement the budget if approved by the Council. He explained his presentation this evening was done to provide clarification on his previous recommendation. Mayor Jacobsen mentioned that the City has had a surplus for each year since 2006. This has made the City more financially successful. He was pleased with the diligent work completed by Staff and noted the Council has also been working diligently to remain financially responsible for the taxpayers. Motion by Councilmember Burg,seconded by Councilmember Samuelson to approve a Resolution adopting the final 2013 Budgets with a 2% COLA increase and step increases for non-union employees in 2013. 2 Ayes,3 Nays(Mayor Jacobsen,Bauman and Jacobsen opposed)-Motion Failed Motion by Councilmember Jacobsen,seconded by Councilmember Burg to amend the 2013 Budget to reflect a 1% COLA adjustment with step increases for non-union employees in 2013 with the tax levy remaining flat through the use of a community reinvestment fund transfer. Councilmember Bauman clarified if the step increases were approved, this would be compounded annually from this point going forward. Councilmember Jacobsen understood this part of the recommendation. Councilmember Bauman stated the community reinvestment fund would have to be used to cover this additional expense in order to keep the tax levy flat. City Manager Lotter explained the community reinvestment fund had a balance of$200,000 in 2012 and would be $268,000 in 2013.