#18 - Preliminary 2025 Budget and Tax Levy

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1 STAFF REPORT DATE: September 17, 2024 TO: Mayor & Council FROM: Clarissa Hadler, Finance Director AGENDA ITEM: Preliminary 2025 Tax Levy and Draft Budgets BACKGROUND: In preparation for adoption of the preliminary tax levy, this memo addresses the following information: discussion on preliminary levy, and assumptions being used to prepare the preliminary budget. Update after Budget Workshop – This memo is largely the same as was presented at the Budget Workshop on August 27. I’ve made efforts to highlight in blue the major changes to the document. In response to feedback from Council at that workshop, staff did make some changes to conference & training budgets and has provided additional notes on miscellaneous and trainings. Some minor changes to other line items may have occurred to fix mistakes in formulas or account for new information as it is received. We will continue this fine tuning through the fall months to present the most accurate budget possible in December. Further, in response to the workshop request on September 10 to pursue landscaping along Lake Elmo Ave. staff has added $50,000 to the budget and levy to provide flexibility in that planning process. This is not reflected in departmental budgets yet. For the moment, we’ve added it to the contingency line while we work through that planning process. ISSUE BEFORE COUNCIL: 1) What changes, if any, should be made to the draft budgets? 2) Should Council adopt the Preliminary Levy as presented? OPERATING BUDGETS: Attachment 1 includes the entire General Fund Operating Budget and Utility Operating Budgets. Below are a number of points that provide brief context for changes within department budgets. Revenues Revenues are expected to remain largely the same as 2024 for Licenses and Permits and Charges for Services. Revenues in this area were over $1 million in 2020 and 2021, but due to the effects of a changing housing market moving toward more multifamily, revenues are lower than when single-family residential development was stronger. We are currently projecting 200 - 250 new homes, with a larger percentage of those being townhomes, which bring lower permit fees. The Council had generally expressed interest in implementing franchise fees on electric and gas providers earlier in the year, so we have worked those into revenue projections. The current assumption is that we would be able to raise approximately $500,000 annually, and we would be able to fully implement by March of 2025, so 2025 is prorated to 10 months. Information regarding Franchise Fees specifically can be found in the Appendices. (of the August 27 workshop memo)