04-19-2021 WS - Laserfiche WebLink

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Key 2022 Budget Issues: The February state budget forecast projects a surplus of $1.57 billion for the next biennium (begins July 1, 2021 thru June 30, 2023). Local Government Aid was projected to increase minimally. In our case, the 2022 amount was estimated to be $846,417 under current law compared with $844,418 in 2021. Future economic conditions may change this and we will have to wait for the legislature as no budget items have been passed. The state has a reserve of 2.377 billion and a cashflow reserve of 350 million. The state is required under current law to use $491 million of the reserve towards the 2022/2023 budget but that could change. The state legislature is scheduled to adjourn on May 17. The City Council budgeted for 50% of anticipated LGA for 2021 to guard against any legislative cuts or economic weakness associated with the state budget. Inflation is modest at present. (1.3%) Inflation is a wild card in the second half of the year, the Federal Reserve and the Congress are pumping a lot of stimulus into the economy which could have an inflationary effect in future quarters. The City’s charter cap would allow a levy increase of 2% plus inflation up to 5% but excludes debt service levies, voter approved levies, and capital project levies from inclusion in the cap calculation. A 1% levy increase would generate an additional $58,663 in tax revenue. Property taxes account for 70.21% of General Fund revenues and operating transfers in. Ramsey County will provide preliminary 2022 values and projections in late August. The City has settled contracts thru 2022 with the two police unions and the public works bargaining group. The contracts provided for a 3.0% cost of living adjustment in 2022. 23 employees will receive step or longevity increases in 2022 of 2% to 10% in addition to the COLA. We will need to determine if we are pay equitable and that could have a nominal impact on the 2022 budget. Health insurance premium increases are not known, we have been a small group (age rated premiums) but will be a large group in 2022 (experience rated premiums) this could have a larger than expected increase in premiums. We will receive our rate notice in October. The impact to the budget will depend upon the size of the unknown rate increase. The City’s health insurance contribution increased $15 in 2021 to $1,170 per month compared with $30 in 2020. The employer’s share of PERA will remain at 7.50% for General (non-police) plan members, the PERA General rate has increased from 5.53% in 2005 to 7.50% in 2015. The Police plan will remain at 17.7%. The police PERA rate has increased from 9.3% in 2005 to 17.7% in 2020. Current PERA pensions are funded at 79.06% for General Employees Retirement Fund and 87.19% for Police and Fire Retirement Fund. A liability has been recognized in the entity-wide financial statements, (General $1,672,733, Police 2,231,555) as a result of implementing GASB Statement 68. The state legislature controls the resolution of the underfunded pensions. The payroll cost for 52.5 FT 9 seasonal employees is $3,317 per hour, $26,539 per day, $132,693 per 40 hour week and $6,900,049 per year. Work comp will decrease by $1,681 due to a decrease in our experience mod from 1.07 to 1.00. Overall, pay and benefit costs will increase by approximately $371,365 across all funds and $260,704 for the General Fund. County dispatch fees were $102,053 in 2021. The 2021 fee increased $5,245 or 5.42% from the prior year, we have not received the 2022 amounts. The Fire department will have a 2% to 4% increase in operating costs and a larger capital outlay expense for 2022. Our share will be mitigated somewhat by a switch to a fixed percentage formula going forward. (2021 – 15.5%, 2020 – 15.998%, 2019 – 16.373%, 2018 – 16.158%, 2017 – 15.819%)