#04 - City Debt Discussion - Laserfiche WebLink

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It is unlikely that we would be able to incorporate this strategy to any effect within the parameters of Council’s earlier “2% over prior year” tax rate goal. Early estimates from the county and long-term financial plan projections from last fall suggest the possibility that the current operations and debt service would fall in line with that goal, though it is too early to say with any certainty. Any additional infrastructure levy should be contemplated as being in addition to that earlier goal. That said, our tax rate is lower than many Washington County communities. The rate in 2014 was 27.761%, jumped in 2022 to 30%, but is now down to 24.55%. Also, a brief review of that rate shows that the tax rate associated with operations has decreased; due largely to increased revenues from development off-setting increasing expenses as the organization has grown. The last few of paragraphs deal mostly with street projects, which are funded via the property tax levy. There are also utility projects, funded via the Water, Sewer, and Stormwater Funds. The effects on these funds would be similar, except that the additional cash would need to be raised via User Fees. Staff will begin updating the Utility Long-term Financial Plan this summer, and if Council directs, can incorporate more cash funding of projects in that modeling, as well. Once established at a minimum of 35% cash for all projects, we would expect to save over $100,000 in interest for every $350,000 that is not borrowed, over the life of the bond, effectively decreasing our overall infrastructure costs by 8.5%. $1,000,000 Project Bond Amount Total Interest Paid (15 yr term) Savings 100% debt $ 1,000,000 $ 320,000 35% cash $ 650,000 $ 208,000 $112,000 35% interest savings 8.5% overall project savings Again, all of this is simply one of many options to contemplate in our long-term financial planning to ensure financial sustainability and resiliency, and to address some interest from councilmembers to discuss our current debt levels. RECOMMENDATION: If Council is interested in moving toward a similar model to the above, staff will work that goal into our upcoming budget drafts and narratives. In that case, staff would appreciate direction at this workshop as we will be moving forward with budget preparation in the coming weeks.