07-27-2020 Council Special Work Session Packet

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• Increased funding to expedite diseased tree removal and replacement - $10,000 Intergovernmental revenues and construction and development related activities have improved slightly over the last year, while other revenue areas have declined, such as municipal fines. Other miscellaneous revenues have remained relatively flat, with the exception of an increase in transfers from other funds. An annual transfer of $40,000 from the Cable TV/Communications fund is planned to support the addition of a PT Communications Coordinator position. The 2020 budget included the use of $200,000 in general fund reserves, as well as a transfer of $380,000 from the Closed Bond Fund. A portion of the general fund balance also remains committed as follows: $375,000 for the Recreation Complex Phase I and $50,000 for a Veteran’s Memorial. The 2021 draft presented for discussion does not include the use of general fund reserves. If the 2020 budget uses the full amount of budgeted use of reserves, there are no additional dollars available for use in 2021 if the Council wishes to maintain a reserve balance of 50%. Staff has estimated an increase of 5% in 2021 Taxable Market Values based on Preliminary 2021 Estimated Market Values provided by Anoka County. The increase in property values is estimated to increase the City’s Net Tax Capacity Value by $1,247,458 or approximately $503,392 at the Current Tax Capacity Rate. The preliminary levy would increase 12.63% given the needs and requests included within this draft budget. The projected tax capacity rate would increase to 43.352% from 39.870% in 2020. Two drivers of the significant proposed levy increase are the use of general fund reserves and the Closed Bond Fund to balance the budget in 2020 and the additional personnel and capital requests included in the proposed 2021 draft budget. Staff is prepared to discuss the draft budget with the City Council during the initial budget work session on Monday, July 27th. Budget work sessions may be scheduled at the discretion of the Council to achieve the desired budget level for 2021. Council action is requested by the September 28th meeting in order to set the preliminary tax levy and to schedule a public hearing date in December on the budget and tax levy. The preliminary levy set at the September meeting may not be increased thereafter, but may be lowered before approving the final budget and levy in December. Attachments 2021 Draft Budget & Tax Levy