09-26-2018 Council Packet - Laserfiche WebLink

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STAFF REPORT TO:Mayor Keis and Members of City Council FROM:Chris Heineman, City Administrator Sharon Provos, Finance Director DATE:September 26, 2018 RE:2019 Preliminary Levy At our last meeting on September 12, Finance Director Sharon Provos presented the 2019 preliminary budget and proposed levy for Council consideration. The 2019 levy included in the budget document reflects a 3.41% gross levy increase and a 4.68% net levy increase (see page 1 of budget document). Following the staff presentation, Council members indicated they would like to see the gross levy increase under 3% to maintain a steady level from previous years. In order to accomplish this, we will need to make a combination of revenue increases and expense reductions totaling approximately $13,000 in the General Fund from the preliminary budget numbers. There are several areas where this can be achieved, and staff believes this is a realistic target to attain before the 2019 Budget is adopted in December. At this time, staff recommends setting the preliminary levy at 3.41% as the preliminary levy can be reduced but cannot be increased. The City of Little Canada is required to establish our preliminary levy by September 30th. The attached 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 is the funds that require tax levy support; predominately the General Fund. This budget maintains our current amount of Local Government Aid (LGA) usage in the General Fund ($86,901) even though our LGA allotment is increasing by $1,996 for 2018. We are certified to receive $434,379 of LGA in 2019 versus the $432,383 we received this year. The balance of $347,478 is going to the General Capital Improvement Fund per previous direction. General Fund revenue side is relatively flat with the exception of property taxes. We also continue to budget building permit revenues very conservatively for two reasons. One reason is without much undeveloped land, it is difficult to plan for consistent growth in new construction. The other reason is to avoid shortfalls during economic downturns that would force other expense reductions to balance the budget. In a year when activity is higher than those projections, we will typically see a transfer to the General Capital Improvement Fund which also helps keep pressure off levy increases.