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Home My WebLink About2014.12.01 CC PowerPoint 2015 Budget HearingCITY OF HUGO 2015 Budget & Tax Levy Presentation Presentation Topics • 2014 Tax Rate Comparisons • Proposed Tax Levy for 2015 • Tax Levy Items • General Fund Budget • Proposed Urban Tax Rate for 2015 • Tax on Median Value Homestead • Recommendations Median Residential Homestead Value — Pay 2014 • $191,800 Median Value Homestead Pay 2014 One-half of the 4,259 residential homesteads are valued less than $191,800 One-half of the 4,259 residential homesteads are valued more than $191,800 Comparative 2014 Tax Rates • Average City Tax Rate (all 853 cities in Minnesota) ....................... m 0 m 000480751 • Actual Average LGA ............ $595,074 • Tax on $191,800 Homestead = $837.65 • City of Hugo's Urban Tax Rate ..36.374% • Actual Local Government Aid ... $0 • Tax on $191,800 Homestead = $624.99 Tax Difference of $212.66 Tax Difference of 34% Comparative 2014 Tax Rates • Average City Tax Rate (31 cities in 7 County Metro Area 10,000 — 24,999 Pop) ........ 45.504% • Average Actual LGA ................ $567,093 • Tax on $191,800 Homestead = $781.86 • City of Hugo's Urban Tax Rate ... 36.374% • Actual Local Government Aid .....$0 • Tax on $191,800 Homestead = $624.99 Difference of $156.87 Difference of 25% Comparative 2014 Tax Rates Cities in Washington County Oak Park Heights ......... 59.6407% Stillwater .................... 58.3592% LGA = $394,011 Forest Lake ................ 44.6534% LGA = $ 56,004 Cottage Grove ............. 43.8116% LGA = $ 59,626 Oakdale ..................... 41.2008% LGA = $106,035 Scandia ..................... 40.9756% Woodbury .................. 38.0756% Mahtomedi .................. 36.4137% Hugo ......................... 36.3740% Lake Elmo ..................27.7607% Flat Tax Rate • City tax collections increase when property values increase • City tax collections decrease when property values decrease Tax Levy History (flat tax rate) • $5,329,096 Pay 2009 Levy • $4,940,809 Pay 2014 Levy • 7.3% reduction Fiscal Measures • Cut 2 Full -Time Positions in Com Dev Department • Knocked out all but one parcel from the Bald Eagle TIF District • Refinanced 2 Bond Issues • Cut the CIP Levy Mid -Year Budget Review • Staff was directed to prepare a preliminary tax levy resolution for consideration at the September 15thCouncil meeting. • Goals: 1) No increase in urban tax rate 2) Provide for balanced budget with no structural deficit Tax Levy (flat tax rate) • $4,940,809 Pay 2014 Levy • $5,717,021 Pay 2015 Levy (proposed) • $ 776,212 Increase • Urban Tax Rate Will Decline 0. 15% • Rural Tax Rate Will Decline 0.33% Market Value Changes — Pay 2015 • $ 9,266,300 • ( 516)500) • 212,459,300 Agricultural Commercial/Industrial Residential $ 221,209,100 Market Value Increase 18% 1.6% due to new construction Median Homestead Value: • $ 228,100 Pay 2015 • $ 191,800 Pay 2014 $ 36,300 18.9°/o Increase Tax Changes by Comm/Industrial • 167 Total Commercial/Industrial Parcels • 163 Parcels with declining tax Market Value Exclusion Exclusion Decreases as Value Increases MHV TMV Pay 2015 $228,100 - $16,711 = $211,389 Pay 2014 $191,800 - $19,978 = $171,822 $ 36,300 18.93% $ 39,567 23.03% 2015 Proposed Tax Levy $5,717,021 753,245) Total Proposed Levy Required Tax Levy • $4,963,776 Discretionary Tax Levy Debt Service & Abatement Levy • $131,803 PW Facility Bonds of 2004 • $280,634 Tax Abatement Bonds of 2005 • $ 86,697 Improvement Bonds of 2009 • $102,440 Tax Abatement Bonds of 2009 • $ 88,309 Cl P Bonds of 2010 • $ 63,362 Improvement Bonds of 2011 $753,245 Debt Service Levy for 2014 Debt Service Levies $1,340,000 $1,325,000 $2,560,000 $965,000 $1,605,000 $7,920,000 Total CIP Bonds of Imp Bonds of CIP Bonds of Imp Bonds of Tax Abate of Tax Abate of Debt and 2010 2011 2004 2009 2009 2005 Abate Levy Pay 13 $ 236,880 $ Pay 14 $ 118,958 $ Pay 15 $ 88,309 $ Pay 16 $ 87,360 $ Pay 17 $ 89,509 $ Pay 18 $ $ Pay 19 $ $ Pay 20 104,288 $ Pay 21 86,613 $ Pay 22 $ $ Pay 23 $ $ Pay 24 346,419 $ $ Pay 25 $ Pay 26 $ 63,412 $ 131,127 $ 63,387 $ 133,073 $ 63,362 $ 131,803 $ 63,336 $ 133,304 $ 63,311 $ 131,462 $ 63,286 $ 132,328 $ 63,260 $ 132,767 $ 63,235 104,288 $ 68,228 86,613 $ 13,235 $ 342,873 $ 18,598 $ 102,795 18,569 346,419 $ 18,399 18,228 89,756 $ 192,819 $ 64,368 $ 88,227 $ 101,925 $ 201,498 $ 86,697 $ 102,440 $ 280,634 $ 85,168 $ 102,188 $ 204,219 $ 83,390 $ 104,288 $ 203,585 $ 86,613 $ 106,230 $ 342,873 $ 84,191 $ 102,795 $ 346,419 $ 778,362 707,068 753,245 675,575 675,545 731,330 729,432 63,235 68,228 13,235 18,598 18,569 18,399 18,228 Tax Collections Collected Within the Fiscal Year of Levy 2005 = 98.40% 2012 = 98.19% 2006 = 98.03% 2013 = 98.29% 2007 = 96.79% 2008 = 96.83% 2009 = 97.12% 2010 = 96.14% 2011 = 96.32% 0 0 0 Ll Ll 11 City Bonded Debt (Gross) $ 1,190,000 PW Facility Bonds of 2004 $ 5,375,000 Tax Abatement Bonds of 2005 645,000 Improvement Bonds of 2007 580,000 Improvement Bonds of 2009 615,000 Tax Abatement Bonds of 2009 520,000 Capital Imp Bonds of 2010 $ 1,105,000 Improvement Bonds of 2011 $ 5,835,000 Crossover Refund Bonds of 2013 $15,865,000 Gross Bonded Debt at 12/01/14 City Bonded Debt (Net) • $ 900,922 PW Facility Bonds of 2004 • $ 4,152,038 Tax Abatement Bonds of 2005 • $ 97,077 Improvement Bonds of 2007 • $ 490,131 Improvement Bonds of 2009 • $ 506,685 Tax Abatement Bonds of 2009 • $ 294,671 Capital Imp Bonds of 2010 • $ 874,302 Improvement Bonds of 2011 • $ 128,429 Crossover Refund Bonds of 2013 $ 7,444,255 Net Bonded Debt at 12/01/14 City Bonded Debt (Per Capita) 2014: $7,444,255/13,878 = $ 536 2012 State Average = $1,757 (State Auditor's Online Report) S&P Long Term Bond Rating: AA+ Bonded Debt Subject to Debt Limit • $ 1,190,000 PW Facility Bonds of 2004 • $ 520,000 Cap Imp Bonds of 2010 • $ 5,835,000 Crossover Refunding Bonds of '13 $ 7,545,000 Bonds Subject to Debt Limit ($ 6,220,977) Funds on Hand $ 1,324,023 Net Debt Subject to Debt Limit Statutory Debt Limit • $1,449,110,900 Taxable Market Value x 3% • $ 43,473,327 Statutory Debt Limit • $ 1,324,023 City Debt Subject to Limit • 97% Unused Debt Limit 2015 Proposed Tax Levy $5,717,021 753,245) Total Proposed Levy Required Tax Levy • $4,963,776 Discretionary Tax Levy 2015 Discretionary Tax Levy • 539,657 CIP Levy • 105,535 Capital Equipment Levy • 106,578 Park Improvement Levy • 64,909 Sealcoat Levy • 17,157 Firefighter's Relief Levy • $4,129,940 General Operating Levy $4,963,776 Total 2015 Discretionary Levy CIP Levy History • $235,931 Pay 2006 thru Pay 2009 • $256, 735 Pay 2010 th ru Pay 2011 • $131,093 Pay 2012 • $ 50,587 Pay 2013 • $ 50,587 Pay 2014 • $539,657 Pay 2015 (Proposed) Funding Source Project Total State Aid Assessments Other Priority 1 Geneva Ave, 145th St, Glenbrook Ave, 147th St $ 1,700,000 $ 5.20,000 $ 1,180,000 146th St, 144th St Reconstruction Priority 2 147tH St, Oneka Lake Blvd, Flay Ave Reconstruc $ 1,150,000 $ 920,000 $ 190,000 $ 40,000 Priority 3 165th St, Ingersoll Ave Reclaitnation $ 1,050,000 $ 930,000 $ 120,000 $ - Priority 4 Homestead Ave, 132nd St, 126th St, Janero Ave $ 1,200,000 $ 500,000 $ 21000 $ 490,000 125th St (and CT N, St Cir), 130th St Priority 5 Oneka Lk Blvd, Harrow Ave, Henna Ave Reclaim $ 900,000 $ 450,000 $ 110,000 $ 340,000 Priority 6 Goodview Ave, Homestead Ave, Ingersoll Ave $ 1,100,000 $ 690,000 $ 160,000 $ 250,000 Priority 7 125th St, Heather Ave, Upper Heather Ave Reclai $ 1,250,000 $ 700,000 $ 160,000 $ 390,000 Anticipated Future 140th St, Fenway Ave/Blvd Ct, 130th St, Falcon $ 1,150,000 $ 400,000 $ 100,000 $ 650,000 Ave, Farnham Ave Mill & Overlay/Reclaim Future— Fountain Ave, Foxhill Ave, 138th St, Freeland Ct $ 1,400,000 $ 250,000 $ 1,150,000 Freeland Ave, Geneva Ave, 135th St/Ct N Reco Total $ 10,900,000 1 $ 415909000 1 $ 1,8209000 1 $ 41490,000 Bonding for CIP • Special Assessment Improvement Bonds can be issued only if 21 % or more of the project costs are assessed • Only Rice Lake Meadows project qualifies Cost of Issuance Crossover Refunding Bonds of 2013 • $33,500 Financial Advisor Fees • $11 ,000 Bond Rating Fees • $ 8,500 Bond Counsel Fees • $ 4,000 Trustee Fees $57,000 Typical Issuance Fees Bond Principal & Interest Due by Year Due in 2015 = $7,070,000 Due in 2016 = $1,570,000 Due in 2017 = $1,625,000 Due in 2018 = $1,680,000 Due in 2019 = $1,615,000 Due in 2020 = $1,675,000 2021— 2027 = $ 630,000 Principal $272,281 $126,235 $106,242 $ 83,058 $ 58,402 $ 32,636 $ 44,725 Interest Totals $15,865,000 $723,579 Interest/Principal = 4.6% STREET CONSTRUCTION FUNDS Beginning Fund Balance REVENUES: Property Tax Levy - C I P Special Assessments - South Egg Lake Special Assessments - Fable Hill Bridge Special Assessments - Rosemary Way Special Assessments - Property Demolitions Special Assessments - 165th Street State Aid EXPENDITURES: 165th Street/Ingersoll Avenue Reclamation Rosemary Way Construction Rosemary Way Construction (from escrow) Rice Lake Meadows Reconstruction Oneka Lake Blvd/147th Street/Flay Ave Recon Homestead Ave/1 25th/1 26th/1 30th/1 32nd/Janero Oneka Lake Blvd/Harrow Ave/Henna Ave Recon Goodview Ave/Homestead Ave/Ingersoll Ave 2014 2015 2016 2017 2018 2019 $ 2,373,617 $ 1,465,135 $ 937,549 $ 952,977 $ 911,419 $ 1,162,877 $ 50,587 $ 539,657 $ 539,657 $ 539,657 $ 539,657 $ 539,657 $ 21,720 $ 20,794 $ 20,010 $ 19,226 $ 18,442 $ 17,658 $ 29,968 $ 25,086 $ 24,171 $ 23,256 $ 22,341 $ 152,162 $ 141,951 $ 136,774 $ 131,597 $ 126,421 $ 13,255 $ 2,926 $ 2,816 $ 2,706 $ 2,597 $ 2,487 $ 26,100 $ 427,185 $ 442,000 $ 442,000 $ 442,000 $ 442,000 $ 442,000 $ (811,982) $ (1,181,602) $ 364,125 $ (1,700,000) $ (1,150,000) $ (1,200,000) $ (900,000) $ (1,100,000) Ending Fund Balance $ 1,465,135 $ 937,549 $ 952,977 $ 911,419 $ 1,162,877 $ 1,064,679 Equipment Replacement • $176,000 Replace Snow Plow in 2015 (#205-05) • 50,000 Purchase Water Truck (in lieu of renting) • 49,000 Replace PW Ford 550 in 2015 (#110-05) • 29,000 Replace PW Pickup in 2015 (#111-05) • 10,500 Replace PW Director's Truck (1/3 of cost) • 10,000 Bobcat Attachments • 692,000 Equipment Needs in 2016 • 319,500 Equipment Needs in 2017 • 262,000 Equipment Needs in 2018 $ 1,598,000 Total Equipment Purchases Equipment Replacement $ 983,929 Funds on Hand 01/01/15 105,535 2015 Tax Levy 105,535 2016 Tax Levy 207,000 Transfers In 105,535 2017 Tax Levy 105,535 2018 Tax Levy $ 1,613,069 F $ 1,598,000 E unds Thru 12/31/18 quipment Needs Park Improvement Levy • $296,000 Original Park Levy • (102,440) Tax Abatement Bond Levy • ( 86,982) Park Planning & Programming $106,578 Net Park Levy for 2015 Sealcoat Program Levy $ 64,909 Diverted from CIP in 2012 to enhance sealcoating program Firefighter Relief Levy • Fire Relief Pension Fiscal Policy • Levy taxes in an amount equal to the PERA employer percentage as applied to total fire department wages & salaries • $228,761 x 7.50% _ $17,157 • Place in separate special revenue fund • No mandatory contribution required in 2015 General Fund Levy • $4,129,940 $3,912,940 $ 217,000 $ 117,000 $ 100,000 Pay 2015 Tax Levy Pay 2014 Tax Levy Increase Additional Law Enforcement No Structural Deficit Budgeting Techniques • Conservatively estimate revenues • On-going practice of "contingency budgeting" for expenditures • Expenditures may or may not occur • Usually leads to annual budget surpluses that can be added to our reserves or carried over to the following year • Favorably looked upon by bond rating agencies • $145,085 • $104,183 • $ 17,484 • $110,799 • $ 62,560 • $ 33,450 • $ 23,500 • $ 5.899 Other Revenues Franchise Fees License & Permit Fees Mobile Home Taxes & Penalties Intergovernmental Revenue Charges for Services Fines and Forfeits Investment Earnings Rentals & Miscellaneous $502,960 Non -Tax Levy Revenues General Fund Budget • Budget Document Contains 452 General Fund Expenditure Line Items • Expenditures are Grouped by Function 1) General Government 2) Public Safety 3) Public Works 4) Park Planning and Recreation 5) Unallocated (all other) General Fund Budget • $ 4,632,900 2015 Budget • $ 4,372,356 2014 Budget • 260,544 5.9% Increase • Large Variations: • $ 117,000 • 18,668 • 11,747 • 11,452 Additional Deputy Liab/Prop/Auto Insurance Street Lighting Salt (snow plowing) Budget Factors: Personnel • 21 Regular Full -Time • 2% Cost of Living Adjustment to Matrix • Step Increases • 13 Employees Already at Maximum • 8 Employees Progressing thru Steps • General Fund Cost = $47,131 Salary Market Data • LMC On -Line Salary Survey • 15 Metro Cities (pop: 10,000 — 20,000) • Hugo Average Minimum Range: -3% • Hugo Average Maximum Range: 2% Chief's Retention Program • $0.50 per hour increase per year starting after 5thyear of employment and capping at 1 0t" year • 1St step implemented in 2014 2"a step budgeted in 2015 Health Care Reform * No lifetime dollar limit on most benefits * No pre-existing condition limitations * Keep children on parent's group until age 26 * Four new taxes on health insurance plans — passed on thru higher premiums Premiums increased 6% for 2014. Health Care Coverage • $1,500 deductible for single contract • $3,000 deductible for family contract • Cumulative deductible (all employees on the group) _ $37,500 HealthPartners increased total out-of-pocket maximums $500 per contract (above the deductible) * Cumulatively, employees are responsible for an additional $7,500 in costs 2015 Premiums • $186,997 due 2015 age Actual Premium • ($177,201) due 2014 Actual Premium $ 9,796 5.53% Increase • Increase due to age of group = 3.02% • Increase due to other factors = 2.51 2015 Proposed Tax Levy • 753,245 Debt Servic • 539,657 CIP Levy e & Abate Levy • 105,535 Capital Equipment Levy 106,578 Park Improvement Levy 64,909 Sealcoat Levy 17,157 Firefighter's Relief Levy 29,940 General Operating Levy • $4,1 ---------------- $5,717,021 Total 2015 Proposed Levy Fiscal Disparities • Property tax base sharing program unique to the 7 -county metro area • Portion of growth in commercial, industrial, and public utility property value goes into a tax base sharing pool • Distributed to each taxing jurisdiction based on market value per capita • Cities with relatively less market value per capita receive a larger distribution than cities with greater market value wealth per capita Fiscal Disparities Distribution • Pay 2009 = $490,589 • Pay 2010 = $556,789 +13.49% • Pay 2011 = $602,566 + 8.22% • Pay 2012 = $576,529 - 4.32% • Pay 2013 = $535,259 - 7.16% • Pay 2014 = $531,665 - 0.67% • Pay 2015 = $518,463 - 2.48% After Fiscal Disparities $5,717,021 Proposed 2015 Tax Levy $ 518,463 From Fiscal Disparities $5,198,558 Paid by Local Taxpayers • Urban Tax Rate Will Decline 0. 15% • Rural Tax Rate Will Decline 0.33% Tax Impact Total Urban Tax Rate City Tax on Median Value Homestead: Market Value Exclusion Median Taxable Homestead Tax Capacity Net Tax Dollar Change Pay 2014 Final 36.374% Pay 2015 Proposed 36.319% $ 1917800 $ 2287100 $ (19,978) $ (16,711) $ 171,822 $ 211,389 $ 17718 $ 27114 $ 624.99 $ 767.76 $ 142.77 Tax on Median Value Homestead Pay 2009: MVH = $296,600 Tax = $ 0.3344% of MV Pay 2015: MVH = $228,100 Tax = $ 0.3366% of MV 992 Tax Changes by Homestead Parcel • 4,259 Total Residential Homestead Parcels • 21 Parcels with declining City tax • 1,768 Parcels (42%) with city tax increase between 15.1 % and 20.0% • 2,470 Parcels (58%) with city tax increase > 20% Urban Tax Rate in ISD 624 TIIL UNIVE got B53618231 L 5% 37% Other City 27% 31% Schools County Comparative 2015 Tax Rates Cities in Washington County Oak Park Heights ......... 57.3118% Stillwater .................... 55.1333% LGA = $629,046 Forest Lake ................ 46.2587% LGA = $ 72,653 Cottage Grove ............. 41.6027% LGA = $ 72,518 Oakdale ..................... 39.1029% LGA = $134,711 Mahtomedi .................. 38.0184% Hugo ......................... 36.3197% Woodbury .................. 34.6350% Scandia ..................... 34.6079% Lake Elmo .................. 23.7926% State Property Tax Programs Homestead Credit Refund: Must own and occupy home on January 2, 2015 Based on household income and property taxes paid. The 2015 limits are not available yet; for 2014 the total household income must have been less than $105,500. The 2014 maximum refund was $2,580. Forms available at www.revenue.state.mn.us State Property Tax Programs Special Property Tax Refund: Must own and occupy home on January 2, 2014 and January 2, 2015 Net property tax on homestead must have increased by more than 12% and the increase must be $100 or more — no income limit. The refund is 60% of the increase over 12%, to a maximum of $1,000. Forms available at www.revenue.state.mn.us Conclusions • Budget satisfies the funding priorities established by City Council 1) Funds our capital improvement program 2) Buys down our bonded debt 3) Adds law enforcement deputy • Budget is balanced with no transfers in • Urban and rural tax rates will decline Recommendations Open up public hearing Take comment Close public hearing Council discussion Consider adoption of final budget and tax levy resolutions