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Management Summary In preparing the 2025 Budget, Staff continued its mission to maintain a high level of City services with the use of financially conservative budgeting. The 2025 Budget resulted in a $491,050 increase over last year’s levy amount, equating to a 5.34% levy increase. General and HRA Funds Each year the General Fund revenue and expenditure budget line items are examined for changes in expected collections/charges, labor adjustments, changes in contract rates, insurance rates, utility costs, usage of various materials or needs, etc. The findings of this examination produce the drivers associated with the proposed 5.34% increase in the Overall Levy. The chart below demonstrates what the cost drivers for general fund dollars are and how they are allocated. It may be noted that when police and finance costs are netted with offsetting contract revenues their portions are reduced to 44% and 3% respectively. PERSONNEL COSTS – 73% of expenditures, overall budgeted costs increased by $813,856 comprised of 12.80% increase in Payroll & related expenses and 8.64% increase in health insurance costs. The 2025 base wage increase is based on the city’s unions accepting a 3% cola along with appropriate market adjustments. High market demands had the impact of driving up requests and having a more significant impact on the levy than in previous years. The cost of all wage increases and associated tax and retirement benefits is $755,384. This amount also accounts for the following: O The police department budget includes the full year impact of restoring the lieutenant position and adding a VCET officer in 2024. These additions occurred mid-year. The budget impact is an increase of $152,860 in 2025. O Similarly, the assistant fire chief position was added midyear in 2024, the impact of the full year of the position in 2025 will be an increase of $68,828. O Health insurance premiums increased an average of 5% when applied to 2025 employee elections. The increase is shared 50/50 by the city and the employees. The 2025 impact of the shared increase is $58,472. CONTRACTED SERVICES – 9% of expenditures, net decrease of ($44,913), mainly a result of Hennepin County Board of Commissioner’s decision to no longer charge cities for assessing services; this will be levied through the county’s levy going forward. Construction permits inspections budgeted at an increasing baseline activity has results in greater expense of $5,394. This increase has no impact on the levy as the inspection fee is a percentage of permit revenue received. 3