Agenda Packets - 2023/04/03 - Laserfiche WebLink

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Key 2024 Budget Issues: The February state budget forecast projects a surplus of $17.8 billion for the current biennium (July 1, 2023 thru June 30, 2025). Local Government Aid was projected to increase minimally. In our case, the 2024 amount was estimated to be $857,228 under current law compared with $856,860 in 2023. Future economic conditions or legislation may change this and we will have to wait for the legislature as no budget items have been passed. The state legislature is scheduled to adjourn on May 23. The City Council budgeted for 90% of anticipated LGA for 2023 to guard against any legislative cuts or economic weakness associated with the state budget. Inflation has accelerated and is elevated at present. (6.0% February) The Federal Reserve projects inflation to remain elevated for several years but not at the current level. The City's charter cap was recently amended to give the City Council more flexibility to respond to the growing challenges the City faces. The charter cap 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 $64,863 in tax revenue. Property taxes account for 68.95% of General Fund revenues and operating transfers in. Ramsey County will provide preliminary 2024 values and projections in late August. The City has settled contracts with the two police unions and is still negotiating with the public works bargaining group. The settled contracts provided for a 3.0% cost of living adjustment and market adjustments in 2023. The settled contracts provide a 3% COLA in 2024. This will be the most impactful item on the future budget. The City will be conducting a market study for non -union employees during 2023 and there will be some impact from wage adjustment related to this. 12 employees will receive step or longevity increases in 2024 of 2% to 10% in addition to a COLA. Health insurance premium increases are unknown at this time and are based on our experience (experience rated premiums). We will receive our rate notice in September/October. The impact to the budget will depend upon the size of the unknown rate increase. The City's health insurance contribution for 2023 at $1,200 per month compared with no increase for 2022. The City also contributes to the employee HSA, $200 per month for singles and $225 for families, this is comparable with other cities. 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 76.67% for General Employees Retirement Fund and 70.53% for Police and Fire Retirement Fund. A liability has been recognized in the entity -wide financial statements, (General $2,756,171, Police 8,033,063) as a result of implementing GASB Statement 68. The state legislature controls the resolution of the underfunded pensions. The payroll cost for 56 FT, 9 PT, 9 PW's seasonal employees, and 10-15 Recreation seasonals is $3,845 per hour, $30,760 per day, $153,800 per 40 hour week and $7,997,967 per year. Work comp will increase by $56,357 due primarily to across the board rate increases. Overall, pay and benefit costs will increase by approximately $614,065 across all funds and $407,159 for the General Fund pending a final contract with PW. County dispatch fees were $94,819 in 2023. The 2023 fee decreased $4,455 or 4.49% from the prior year, we have not received the 2024 amounts. The Fire department will have a 3% to 5% increase in operating costs and a higher capital outlay expense for 2024. Our share has been mitigated somewhat by a switch to a fixed percentage formula going forward and retirement of the SLP Equipment Note. (2023 — 15.5%, 2022 — 15.5%, 2021— 15.5%, 2020—15.998%, 2019—16.373%, 2018 — 16.158%, 2017—15.819%)