HomeMy WebLinkAbout2020 Budget Memo Council 8.27.19
STAFF REPORT
DATE: August 27, 2019
TO: Honorable Mayor and City Council
FROM: Sue Iverson – Finance Director
AGENDA ITEM: 2020 Budget Information – General Fund, Utility Funds, EDA and Tax
Levy
INTRODUCTION:
In preparation for adoption of the preliminary tax levy in September, this memo addresses the following
information: discussion on preliminary levy, assumptions being used to prepare the preliminary budget,
tax levy, and a discussion on capital improvement funding. The Finance Committee met in July and
reviewed the budgets. The Finance committee will be meeting on Monday, August 26, 2019 to review the
Financial Management Plan as data was not available until Thursday, August 22, 2019 from Washington
County to complete the Plan. Staff will bring the Finance Committee’s recommendations from that meeting
and verbally update the City Council.
ISSUE BEFORE THE COUNCIL:
1) What changes, if any, should be made to the draft budgets?
2) What Preliminary Property Tax Levy would the City Council like to set for certification in
September?
PRELIMINARY LEVY
Last year the staff created a financial forecasting model with the knowledge that it would be refined over
time. The Finance Committee reviewed the model and recommended various scenarios which it used to
determine its recommendation of the budget and levy to the City Council. The City Council ultimately
directed staff to use a model which used an increase of 2% on the tax rate. Currently staff has prepared a
budget that would keep the tax rate at 2% above the 2019 rate. Washington County has provided staff with
the estimates which are needed to project the tax capacity and fiscal disparities components on August 22,
2019.
On the next page is an estimate of these numbers. As you can see from the table on the next page, the Pay
2019 rate was 22.927% with an overall levy of $4,179,839. To achieve a 2% increase in the tax rate for
Pay 2020, using the estimated taxable value of $20,091,583 the overall levy would increase by $769,984 to
$4,949,823.
***PLEASE NOTE THESE ARE ESTIMATES USING NUMBERS FROM THE COUNTY***
Below shows the impact to the average valued home of $416,812. Please note there is an impact to the
annual taxes as a result of the levy increase and due to the estimated increase in market value of 5% and
increased Fiscal Disparities.
***PLEASE NOTE THESE ARE PRELIMINARY ESTIMATES***
The overall City levy is made up of the General
Fund Operating Levy and the Debt Levies. The
table to the left shows the Actual 2019 levy and the
Proposed 2020 levy.
2019A Bond Est. is for the 2018 and 2019 projects.
Actual Proposed %
Item Pay 2019 Pay 2020 Change
(A)(B)(C)
1.Levy before reduction for state aids $4,179,839 $4,949,823 18.4%
2.State Aids - $0 $0 0.0%
3.Certifed Property Tax Levy = $4,179,839 $4,949,823 18.4%
4.Fiscal Disparity Portion of Levy - $199,221 $249,327 25.2%
5.Local Portion of Levy = $3,980,618 $4,700,496 18.1%
6.Local Taxable Value ÷ 17,361,919 20,091,583 15.7%
7.Local Tax Rate = 22.927%23.395%2.0%
8.Market Value Referenda Levy $0 $0 0.0%
9.Fiscal Disparity Portion of Levy (SDs only)- $0 $0 0.0%
10.Local Levy = $0 $0 0.0%
11.Referenda Market Value ÷ 0 0 0.0%
12.Market Value Referenda Rate = 0.00000%0.00000%0.0%
(D)(E)(F)(G)(H)(I)
Taxable Homestead Taxing
Market Market Taxable District
Value Value Market Tax Net
B/4 Credit Exclusion Value Capacity Tax
Proposed Pay 2020
Pay 2020 MV 76,000@.40%500,000@1.0%(B7 x G) +
X 1.05 - rem up to 413799 @.09%(D - E)rem @ 1.25%(B12 x D)Annual Increase Monthly incr.Annual Increase Monthly incr.Annual IncreasMonthly incr.
Estimated Tax District rate as % of total rate:
150,000 23,700 126,300 1,263 $295.48 $23.80 1.98$ ($24.60)(2.05)$ $48.40 4.03$
416,812 0 416,812 4,168 $975.10 $68.34 5.70$ ($91.37)(7.61)$ $159.71 13.31$
350,000 5,700 344,300 3,443 $805.49 $57.84 4.82$ ($74.10)(6.18)$ $131.94 11.00$
500,000 0 500,000 5,000 $1,169.75 $77.97 6.50$ ($113.63)(9.47)$ $191.60 15.97$
750,000 0 750,000 8,125 $1,900.84 $140.28 11.69$ ($171.07)(14.26)$ $311.35 25.95$
Impact from Market Shifts
Total Change and Fiscal Disparities Impact from Levy Incr
2019 2020
GO 2009B 43,580$ -$
GO 2010A 59,356 57,151
GO 2010B 205,989 206,908
GO 2011A 76,719 74,828
GO 2012A
GO 2012B 65,275 63,669
GO 2013A
GO 2014A 203,885 199,370
GO 2015A 25,113 21,543
GO 2016A 189,419 194,564
GO 2017A 346,598 340,691
GO 2018A Equip Cert 128,996
2019A Bond Est - 299,400
Total Debt Levies 1,215,932$ 1,587,120$
General Fund 2,963,905$ 3,362,703$
Total Levy 4,179,837$ 4,949,823$
OPERATING BUDGETS
Attachment #1 includes the entire General Fund Operating Budget, Utility Operating Budgets and
EDA Budget.
Salary and Benefits
The 2020 preliminary budget is currently being prepared assuming a 2.75% wage adjustment for staff.
Medical benefits are estimated to increase by 10%.
General Fund
Revenues are largely increased due to the proposed
operating levy for the General Fund. Since the City is
in an expansion phase we have projected a
conservative estimate for building permits, planning,
and zoning fees. Cable franchise revenues are
increasing as the City builds out. State Fire Aid and
Municipal State Aids (MSA) for road maintenance are
based on the current estimates done this year. More
detailed information is found in the attached budget.
Staff again worked on budgets to more accurately
reflect costs in the proper departments and services as reflected in the attached budget sheets. The
Administration budget remains fairly flat with the exception of an increase in the Assessing
Services from the county. Elections show an increase as there was no election in 2019.
Finance and Communication budgets are
relatively flat. Engineering reflects a decrease
as the Keats Ave Turn Lane was in the 2019
Budget. The Sheriff’s contract assumes an
8% increase and an additional officer for part
of the year. The Fire Department contains the
replacement of a Dryer as two units have
failed.
For 2019 Building Inspections budgeted for a
part-time Inspector, but since that position not
been filled, staff has reevaluated and changed
this for 2020 to reflect a full-time position.
$5,000 has been budgeted for MnSPECT to
assist in Building Inspections. A new vehicle
for Building Inspections was budgeted in
2019.
Public Works is comprised of Streets (General Fund), Parks (General Fund), Water, Sewer, and
Storm Water. An additional $25,000 has been added to the budget for Street Maintenance Materials
and an additional $73,363 has been added for Salt and Sand as prices have increased.
Transfers have been added for Capital projects for Lake Elmo Ave Phase 3 of $25,000 and
General Fund Revenues
Property Tax Levy 398,798$
Building/Mechanical Permits (5,525)
State Fire Aid 4,000
MSA Maintenance 6,755
Planning & Zoning Fees 4,350
Investment Earnings 40,000
Cable Franchise Revenue 23,183
Miscellaneous 54,346
525,907$
General Fund Expenditures
Assessing Services 7,250$
2020 Election 8,340
Comprehensive Plan (5,000)
Keats Ave Turn Lane (35,000)
Sheriff Contract 71,487
Fire Dept Dryer Replacement 11,500
Fulltime Bldg Inspector 51,583
MnSPECT 5,000
Inspection Vehicle (24,000)
Road Maint Materials 25,000
Salt and Sand 73,363
Lake Elmo Phase 3 Project 25,000
Keats/Hudson Acceleration Lane 107,000
Transfers to Vehicle Replacement Fund 95,063
Elimination of the transfer for Debt Service (67,859)
Other Miscellaneous changes 53,180
401,907$
Keats/Hudson Acceleration Lane of $107,000.
As discussed last year, Transfers to the vehicle replacement fund have risen from $75,000 to
$100,000 for a total increase of $25,000 and the remaining funds from the 2% increase in the tax
rate provide an additional transfer of $665,139. These additional funds help reduce the need to
bond for equipment in the future.
Utility Funds
Overall we have been conservative in our estimates for revenue as we have anticipated a slight
slowdown in construction, but will revise these after we complete the Utility Financial Management
Plan.
The Water Fund remains fairly flat with the exception of reduced Legal Fees as the 3M Litigation is
now completed. The remaining items relate to Capital Improvement Projects and Bond/Interest
payments. We are proposing that there be no increase in Water Rate for 2020.
The Sewer Fund operating fund is increased by $25,000 for Bioxide chemicals at the Lisbon Lift
Station, $6,000 additional costs for the SCDA agreement, and $60,528 for Metropolitan Council
Wastewater charges (which is an increase of 35.74%). Capital Improvement Projects for 2020 have
decreased $135,000 and Bond/Interest payments have decreased due to a bond being paid off.
The Storm Water Fund is also relatively flat showing a reduction in engineering expenses of
$10,000 based on history and a reduction of $40,000 for the Storm Water Comp Plan that was
budgeted in 2019.
EDA/Brookfield Building Fund
The EDA Fund shows a reduction in revenues as some of the tenants have moved out. Expenses
remain relatively flat except for principal payments on the bond.
FINANCIAL MANAGEMENT PLAN
Per direction from the committee, staff has prepared the forecasts keeping the City’s Tax Rate at a
2% increase.
Finance Committee Recommendations:
The Finance Committee will be meeting on Monday, August 26, 2019. Staff will bring their
recommendation to the meeting.
Process for This Evening:
For this evening, staff will discuss the 2020 Proposed Budget, outlining key points and answering
any questions.
Options:
• If Council wishes to see any changes to the proposed budget or levy at the September
meeting, please provide that direction to staff so the documents can be updated before
adoption of the preliminary levy.
ATTACHMENTS:
1) 2020 Proposed Master Budget Worksheet – All Budgets
2) Draft Long-Range Financial Management Plans
3) 2020 Tax Impact Sheet