07-06-2020 Council Work Session Packet

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Assumptions with Future Action •General Fund property tax revenue has been increased for 2020 based on the results of the long-term plan and the Park System Master Plan. o Custodian position - $67,000 o General Fund payroll allocation for Community Development Director increased by $31,554 offset by an EDA payroll allocation decrease of the same amount in 2020. o JCPP cost allocation has been reduced by the County resulting in the City absorbing the additional cost - $30,000. o An additional $75000 of property tax revenue has been forecasted for the General Fund for the years 2020 - 2024 per year to increase level of reserves to 45% of unreserved fund balance. •Fire Equipment Revolving Fund 409 will require further review and analysis. Beginning in 2020, a property allocation of $100,000 has been incorporated into the plan. At this time we do not have a capital schedule for Fire. It is recommended to work with the Fire-Rescue District to incorporate a capital plan into the City long-term plan. •Fleet Fund 615 will require additional analysis and discussion regarding future charge out rates. Internal Fleet charge out rates begin in 2021 based on this analysis. Reserves of $1,200,000 have been allocated to individual fleet replacements to reduce future contributions from the general fund. Enterprise fund replacements are expected to pay 100% of cost. •PERF Fund 235 requires an additional levy beginning in 2021 in order to stay within policy guidelines and capital needs. •Information Technology (IT) Fund 620 was established as an internal service fund to provide for the ongoing operations and replacement of the City’s IT services. In 2019, the operations charge out rate was implemented. Additional analysis has been completed regarding the charge out rate for future years. Continued review is encouraged to ensure technology needs are met •Storm Drainage Fund 515 includes several grant assumptions for major infrastructure projects. Anticipated funding sources include: watershed, Met Council, MNDNR and other resources. If these grants are not secured, financing for these projects may need to be considered. •The Building Fund future costs have been analyzed and internal charges are programmed to begin in 2021. Key Highlights •At December 31, 2017 the General fund had a 51.7 percent operating reserve. This operating reserve percentage will be updated when the 2018 audit is finalized. The Minnesota Office of the State Auditor defines an adequate reserve as 35-50 percent of the General fund expenditures. A 45 percent fund balance reserve has been assumed in the long-term plan. The projected General Fund reserve balance is anticipated to remain at or above 45 percent rage throughout the life of this Plan. We anticipate the General fund levy will grow by an average of 3 percent to maintain the desired reserve level. •The tax levy is projected to increase from $9.0 million (2019 adopted) to $17.7 million (2030 projected) over the duration of this Plan based on the anticipated debt issuance for the police facility along with other capital levy needs. The levy increase will result in an increase in the projected tax rate, ranging from 50.097 percent (2019) to 56.466 percent throughout the life of this Plan. A decrease in the tax levy or applicable tax rate is not anticipated, given the capital needs outlined in our report. o Tax capacity is assumed to grow at a rate of 5 percent during the duration of this Plan. A growth in tax rate in excess of these projections may result in lower tax rates in future years. o The future captured tax increment capacity has not been analyzed for this report and is assumed to remain the same as it was in 2018. 6 Sample