2022.08.31 CC Minutes - Midyear Budget Review

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Mayor Weidt called the meeting to order at 5:00 p.m. PRESENT: Klein, Miron, Petryk, Strub Weidt ABSENT: None STAFF PRESENT: City Administrator Bryan Bear, Finance Director Anna Wobse, Fire Chief Compton, and Assistant Fire Chief Emans, City Clerk Michele Lindau Finance Director Anna Wobse began by talking about the market value of homes and how it affected the flat tax rate policy. Market values for residential homes for 2023 increased by 21%, which meant increased tax collections and an increase in residents’ tax bills. At the preliminary budget workshop in July, there was discussion on deviating from the policy for one year by returning to the lower 2019 tax rate of 36.274%. It was the consensus of the Council to prepare the 2023 budget using this lower rate. Wobse talked about her recommendation to use a contingency budgeting technique, as in the past, where revenues are conservatively estimated, and departments budget for expenses that may or may not occur. General fund surpluses may go into the Building Maintenance Fund or Equipment Purchasing Fund. In addition, $200,000 is budgeted for tax rate stabilization to help if the economy declines. For pay 2023, taxable market value increased by 25%, which equaled a 25% increase in tax capacity. Returning to the lower 36.274% tax rate would mean the proposed levy for 2023 could not exceed $10,984,174. This would be a 14.5% increase over the 2022 levy. Wobse talked about how inflation was affecting spending patterns. Wobse reviewed the seven components of the levy beginning with debt service. There were three outstanding bond issues; Improvement Bonds of 2011, Public Works Bonds of 2020, and the Lions Park Bonds of 2021, equaling $16.235 million or $998 per capita. This was lower than the statewide average for bonded debt of $1,927 per capita. The City was required to levy taxes to make the bond payments, and the total tax levy for bonded debt would be $992,174. It would remain at that level until 2041. Wobse presented a list of non-general fund tax levies totaling $2,057,946. The street CIP levy of $1,160,000 funds street improvement projects without issuing bonds. The project for 2023 was the Birch Tree Ponds area street improvement project. Keeping the stormwater levy at $278,788 allowed additional funding for related maintenance. The special parks levy of $92,000 would help finance neighborhood park improvements. That levy would remain at that level going forward unless increased by the Council. The firefighter’s relief levy of $27,158 was adopted ten years ago to ensure the City was able to cover the pension liability. No contributions were required in 2023, so the fund could grow. Staff recommended the equipment levy be increased by $260,000 for a total of $500,000 for future Fire Department and Public Works equipment needs. Minutes HUGO CITY COUNCIL MEETING MIDYEAR BUDGET WORKSHOP TUESDAY, AUGUST 31, 2022 – 5 P.M.