Agenda Packets - 2022/02/18 - Laserfiche WebLink

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CITY CHARTER – LEVY CAP Section 7.03 Subdivision 1. The City's annual resolution to levy ad valorem taxes (raising money against real and personal property) shall not exceed the lesser of the following formulas; either the prior year tax levy dollar amount increased by a maximum of 5%, or CPI (Consumer Price Index) plus 2%. The CPI shall be the 12 month average of the most recently published data for all Urban Consumers in the Minneapolis, St. Paul metropolitan area, as defined by the U.S. Department of Labor, Bureau of Labor Statistics. HOW DID WE GET HERE? The Recession of 2001/2002 caused the State to Slash Local Government Aid to Cities starting in 2003. Mounds View aid declined from $790,000 in 2002 to $0 in 2006, this represented 16.5% of the 2002 budget. The City Council was forced to increase property taxes to replace some of the lost Aid (2004 – 15.4%, 2005 – 27.5%) Fund Balance declined by 36% in 2003 to absorb the aid reduction that was passed on to cities after their budgets were set. (Not the last time this happened) CHALLENGES Inflation at the City level is not the same as what we experience on a personal level – Labor, contractual services, energy, and construction costs are the cost drivers at the City level. These costs tend to increase at a higher rate than the published rate of inflation. The City is asked to do more by the Federal Government, the State Government, the County Government, The Metropolitan Council, Residents, and Businesses. Changing demographics and an increasing population also require more services. (2010 – 12,155, 2020 – 13,513) This has been done with essentially the same sized staff for the last 20 years. We have averaged about 50 FTE’s during that period with 2021 budgeted at 52.5. It has become more difficult to maintain the same level of services and respond to increasing governmental requirements and an increasing population. Fund balance will decline as a percentage of revenue, which will make it more difficult to respond to future challenges should they occur. Modifying the charter cap will provide needed flexibility to address the structural issues that the City will face in the future.