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-y 1 City of Mounds View Staff Report Item No. 3. Meeting Date: June 6, 2022 Type of Business: Work Session City Administrator Review: To: Honorable Mayor and City Council From: Mark Beer, Finance Director Item Title/Subject: 2023 Draft General Fund Budget There is no state levy limit for 2023. The charter will limit any levy increase up to 6.5 percent with a majority or up to 9% with a super majority. (4/5ths) The current inflation number is 8.3%. (CPI) City departments have been refining their budgets and more adjustments will occur as more accurate information becomes available. The state has concluded the current legislative session with a special session a possibility. Local Government Aid (LGA) is proposed to increase from $850,317 to $857,240. 90% of LGA was included in the 2023 budget. Ramsey County will release preliminary valuation information in August, at that time staff will be able to more accurately calculate the preliminary tax rate and the effect on properties. 2022 is the final year for the labor contracts for the three bargaining groups. Health insurance premiums are capped at a maximum increase of 7% with final premiums provided in October so will be an estimate at this time. The City contribution for 2022 is $1,170 per employee per month. General fund Assigned fund balance (levy reduction) will be approximately $4,645,385 at December 31, 2022. Staff is proposing to transfer a portion of that balance to the Street Improvement Fund due to the change in seal coating and overlay scheduling. (1.5M-2023, 750K-2024) The Council has been using a measured draw down of the levy reduction fund balance and the Strategic Plan proposes that to drop to $232,000 for 2023. The preliminary imbalance after considering the proposed draw down of $232,000 and $1,500,000 from the levy reduction fund leaves an imbalance of $327,684. There are several options that can be used to close this imbalance. (Increase revenues, reduce expenditures, use fund balance, or a combination of all three) A 1 % levy increase would generate an additional $61,789. The City needs to certify a preliminary levy and General Fund budget to the County by September 301h This can be done in August or September. Once set the levy can go down but not up. The City will hold a truth in taxation meeting on Monday, December 5th, 2022 at 6:00 pm with a continuation meeting on Monday, December 121h, 2022 at 6:30 pm if needed. Final levy and budget approval may occur at the December 121h meeting. Conclusion Staff is looking for any additional direction from the Council on how they would like to proceed. Respectfully Submitted, Ma Oz -eer Mark Beer, Finance Director