09-13-2017 Council Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Keis and Members of City Council FROM: Joel Hanson, City Administrator Sharon Provos, Finance Director DATE: September 08, 2017 RE: 2018 Preliminary Budget The initial draft of the proposed 2018 Budget is being presented for your consideration. With this information, we need to establish our preliminary levy by September 30th. While this budget document includes the General Fund, Special Revenue Funds, Debt Service Funds, TIF/HIA Funds, Capital Improvement Funds, the Water Fund, and the Sewer Fund. The primary focus of our review are the funds that require tax levy support; predominately the General Fund. Based on our initial proposal, the 2018 levy indicated by the budget document reflects a 7.22% gross levy increase and a 7.57% net levy increase (see page 1 of the budget document). This reflects a dollar increase in the gross levy of $218,811 plus an increase in our fiscal disparities distribution of $21,501. However, when you couple the levy increase with the growth in our tax base of 9.87%, our projected tax rate drops to 28.296 or a decrease of 2.1% from last year. The levy increase is higher than would be desired. The largest impact is an increase in the Sheriff’s contract of $107,152. This is driven by the addition of the Hoggsbreath weekend deputy (offset by an equal revenue amount), the loss of Gem Lake, an increase in calls for service affecting Little Canada, additional dollars for training, and the full year’s cost of the investigator added in April of 2017. However, if Falcon Heights joins the contract group (very strong possibility), our costs drop by $38,000. That is reflected in the levy sheet labeled Attachment A. You will note that our gross levy has fallen to 5.93% and the net levy is at 6.07%. Another positive impact is the decertification of TIF District 3-2. (We envision presenting the resolution decertifying this district at our next Council meeting.) We have enough cash on hand to retire the remaining debt, repay the TIF Guarantee note to George Sherman per our development agreement with him, and still leave some money that could be used to address paver repairs along Little Canada Road. By decertifying the district, the capture tax base will be released, thereby increasing our tax base. That impact is reflected in Attachment B. You will note that $575,000 of tax capacity is removed from the “tax increment” line and added to the “real estate line”. Based on a 0% levy, this equates to about $150,000 of new money. While it isn’t reflected in our levy numbers, it dramatically impacts the projected tax rate. It drops from 28.296 to 25.354 or a reduction of 10.4%. Staff believes we should use us this one-time opportunity to soften the impact of this