08-09-2021 Council Special Work Session Packet

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WS – Item 1 WORK SESSION STAFF REPORT Work Session Item No. 1 Date: August 9, 2021 To: City Council From: Hannah Lynch, Finance Director Re: 2022 Budget & Tax Levy Background A high-level overview of the 2022 Budget and Tax Levy was provided at the July 26th Budget Work Session. Following that discussion, the first draft of the 2022 Budget and Tax Levy is now presented for your review. The draft includes a proposed tax rate of 42.620% and a $1,077,692 or 9.67% increase in the total tax levy. Staff is looking for Council’s direction regarding where attention should be given to reduce the tax levy and rate, if desired. Comparable City Tax Rates As requested at the July 26th Budget Work Session, 2021 tax rates for comparable and Anoka County cities are provided as an attachment. However please note, no comparison is apples to apples. The services each city provides varies and a city which has Local Government Aid, Franchise Fees, Storm Water Utility Fee, and a Street Light Fee will rely less on ad valorem taxes to derive revenue. In addition, the make up of residential/non-residential property greatly affects a city’s tax capacity rate. 2022 Base Budget The General Fund base budget increase of $247,668 is primarily the result of existing personnel wages and benefits which include the following assumptions for 2022: • 2.25% COLA per the negotiated 2022 union contracts • Continued implementation of the new Compensation Plan • 7.50% estimated increase in health insurance premiums (employer’s share) • 5.00% estimated increase in life and disability and dental insurance premiums (employer’s share) • 5.00% estimated increase in workers compensation insurance premiums • Increase of seasonal/intern hourly wage from $13/$14 to $15/hour (total impact is $19,355) • Allocation of employees to utility funds ($127,172)