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HomeMy WebLinkAbout2015.08.24 CC PowerPoint Mid-Year Budget ReviewCITY OF HUGO 2015 Mid -Year Budget Review 2015 Budget Status • Additional Revenues: $56,714 State Disaster Funds for catch basin repairs from excess rainfall in spring of 2014 • Additional Expenses: $18,000 July 17thstorm cleanup • Estimated General Fund surplus: $164,739 Transfer to Equipment Fund — eliminates need for 2016 equipment levy 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 Comparative 2015 Tax Rates Cities in Washington County Oak Park Heights ......... 56.8039% Stillwater .................... 55.2246% LGA = $629,046 Forest Lake ................ 42.8392% LGA = $ 72,653 Cottage Grove ............. 41.5913% LGA = $ 72,518 Oakdale ..................... 39.1314% LGA = $134,711 Mahtomedi .................. 38.0219% Hugo ........................ 36.3177% Woodbury .................. 34.6570% Scandia ..................... 34.6194% Lake Elmo ..................23.7977% Budget Goals Goals: 1) No increase in urban tax rate 2) Provide for balanced budget with no structural deficit Market Value Changes — Pay 2016 • $ 641,350 • 702,000 • ( 429,100) • (36)634,250) Agricultural Apartments (includes sr. rental) Commercial/Industrial Residential $ (35,720,000) Market Value Decrease $ 13,583,600 -2.3% Existing Properties 0.9% New Construction • $ (233,960) Tax Capacity Decrease -1.67% Tax Levy History (flat tax rate) • $5,717,021 Pay 2015 Levy • $5,629,022 Pay 2016 Levy (proposed) • ( 87,999) Tax Levy Reduction • Assumes no change in fiscal disparities 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% • Pay 2016 = $518,463 NC Caveats • Total tax capacity and fiscal disparities have been estimated by staff • Levy may need to be adjusted when firm numbers are released by the county • The legislature pushed back the levy certification date from Sept. 15t" toSept. 30tH 2016 Proposed Tax Levy • 604,981 Debt Service & Abate Levy • 539,657 CIP Levy • 99,378 Park Improvement Levy • 64,909 Sealcoat Levy • 12,107 Firefighter's Relief Levy • $4,307,990 General Operating Levy $5,629,022 Total 2016 Proposed Levy 0 0 0 0 0 0 City Bonded Debt (Gross) $ 565,000 Improvement Bonds of 2007 (4.0 - 4.15) $ 485,000 Improvement Bonds of 2009 (3.0 - 3.875) $ 520,000 Tax Abatement Bonds of 2009 (2.5 — 3.0) $ 395,000 Capital Imp Bonds of 2010 (2.0 — 2.5) $ 995,000 Improvement Bonds of 2011 (2.0 — 3.0) $5,835,000 Crossover Bonds of 2013 (0.5 — 1.15) $ 8,795,000 Gross Bonded Debt at 08/01/15 $15,865,000 Gross Bonded Debt at 08/01/14 $ 1,040,000 Capital Improvement Bonds (3.9 — 4.0) 4,795,000 Tax Abatement Bonds (3.5 — 3.625) Savings from Refunding • Interest Savings: $393,840.00 • WBL School Savings: $155,731.00 rij rj rij City Bonded Debt (Net) $ 73,299 Improvement Bonds of 2007 $ 390,309 Improvement Bonds of 2009 $ 422,557 Tax Abatement Bonds of 2009 $ 197,926 Capital Imp Bonds of 2010 $ 766,714 Improvement Bonds of 2011 • $ 3,792,411 Crossover Refund Bonds of 2013 $ 5,643,216 Net Bonded Debt at 08/01/15 City Bonded Debt (Per Capita) 2015: $5,643,216/14,201 = $ 397 2013 State Average = $1,707 (State Auditor's Online Report) S&P Long Term Bond Rating: AA+ Bonded Debt Subject to Debt Limit • $ 395,000 Cap Imp Bonds of 2010 • $ 1,040,000 Crossover Refunding Bonds of "13* 1,435,000 Bonds Subject to Debt Limit 320,577) Funds on Hand $ 1,114,423 Net Debt Subject to Debt Limit *Capital Imp Bonds Portion of Issue Statutory Debt Limit • $1,449,202,600 Taxable Market Value x 3% • $ 43,476,078 Statutory Debt Limit • $ 1, 114,423 City Debt Subject to Limit • 97% Unused Debt Limit Bond Principal & Interest Due by Year Due in 2016 = $1,570,000 $126,235 Due in 2017 = $1,625,000 $106,242 Due in 2018 = $1,680,000 $ 83,058 Due in 2019 = $1,615,000 $ 58,402 Due in 2020 = $1,675,000 $ 32,636 2021— 2027 = $ 630,000 $ 44,725 Principal Interest Totals $ 8,795,000 $451,298 Debt Service & Abatement Levy • $ 85,168 Improvement Bonds of 2009 • $102,188 Tax Abatement Bonds of 2009 • $ 87,360 CIP Bonds of 2010 • $ 63,336 Improvement Bonds of 2011 • $ 66,500 CIP Portion of Crossover Bonds • $200,429 Abate Portion of Cross Bonds $604,981 Debt Service Levy for 2016 Debt Service Levy By Year Payable P & • 2016 $1,696,235 • 2017 1,731,242 • 2018 1,763,058 • 2019 1,673,402 • 2020 1,707,636 • 2021 201,341 • 2022 190,912 Year of Collection $604,981 606,793 661,712 661,343 63,235 68,228 13,235 2016 Proposed Tax Levy • 604,981 Debt Service & Abate Levy • 539,657 CIP Levy • 99,378 Park Improvement Levy • 64,909 Sealcoat Levy • 12,107 Firefighter's Relief Levy • $4,307,990 General Operating Levy $5,629,022 Total 2016 Proposed 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 • $539,657 Pay 2016 (Proposed) Capital STREET CONSTRUCTION FUNDS 2015 2016 2017 2018 Beginning Fund Balance $ 1,919,966 $ 1,667,896 $ 1,738,095 $ 1,743,586 ;1:01=10111*13 Property Tax Levy - CIP $ 539,657 $ 539,657 $ 539,657 $ 539,657 Special Assessments - South Egg Lake $ 20,794 $ 20,010 $ 19,226 $ 18,442 Special Assessments - Fable Hill Bridge $ 25,086 $ 24,171 $ 23,256 $ 22,341 Special Assessments - Rosemary Way $ 141,951 $ 136,774 $ 131,597 $ 126,421 Special Assessments - Property Demolitions $ 2,926 $ 2,816 $ 2,706 $ 2,597 Special Assessments - 165th Street $ 6,862 $ 4,410 $ 4,410 $ 4,410 State Aid $ 476,917 $ 492,361 $ 484,639 $ 484,639 EXPENDITURES: Rosemary Way Construction $ (58,561) CSAH 7 & 8 Intersection Easements $ (30,712) Rice Lake Meadows Reconstruction Contract $ (1,124,536) Rice Lake Meadows 10% Contingency $ (112,454) Rice Lake Meadows Engineering $ (140,000) Oneka Lake Blvd/147th Street/Flay Ave Recon $ (1,150,000) Homestead Ave/1 25th/1 26th/1 30th/1 32nd/Janero $ (1,200,000) Oneka Lake Blvd/Harrow Ave/Henna Ave Recon $ (900,000) GoodviewAve/Homestead Ave/Ingersoll Ave Ending Fund Balance $ 1,667,896 $ 1,738,095 $ 1,743,586 $ 2,042,093 Funding Source Project Total State Aid Assessments Other Priority 1 Geneva Ave, 145th St, Glenbrook Ave, 147th St $ 1,700,000 $ 520,000 $ 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 Reclaimation $ 1,050,000 $ 930,400 $ 120,000 $ - Priority 4 Homestead Ave, 132nd St, 126th St, 3anero Ave $ 1,200,000 $ 500,000 $ 210,000 $ 490,000 125th St (and CT N, St Cir), 130th St Priority S ©neka 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 $ 390,004 Anticipated Future 140th St, FenwayAve/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 $ 1,400,400 $ 250,000 $ 1,150,000 Freeland Ave, Geneva Ave, 135th St/Ct N Reco Total $ 10,900,000 $ 415909000 $ 19820,000 1 $ 494909000 Park Improvement Levy • $296,000 • (102,188) • ( 94,434) $ 99,378 758)654 $858)032 Original Park Levy Tax Abatement Bond Levy Park Planning & Programming Net Park Levy for 2016 Est. Fund Balance 01/01/16 Funds Available 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 • $161,425 x 7.50% _ $12,107 • Place in separate special revenue fund • No mandatory contribution required in 2016 Equipment Replacement $185,000 Replace Snow Plow in 2016 (#201-08) 225,000 Replace Road Grader (#306-03) 40,000 Purchase Truck for Lead Worker 30,000 Replace PW Pickup in 2016 (#112-06) 30,000 Replace PW Pickup in 2016 (#113-06) 15,000 Replace Trailers in 2016 693,500 $1)218)500 Equipment Needs in 2017, 2018 & 2019 Total Equipment Purchases Equipment Replacement $ 905,729 Funds on Hand 01/01/16 0 2016 Tax Levy 105,535 2017 Tax Levy 105,535 2018 Tax Levy 105,535 2019 Tax Levy $ 1,222,334 Funds Thru 12/31/19 $ 1,218,500 Equipment Needs Additional Equipment • $107,000 Replace Tractor/Backhoe • $160,000 Replace Street Sweeper $267,000 Storm Water Fund 2016 Discretionary Tax Levy • 539,657 CIP Levy • 99,378 Park Improvement Levy • 64,909 Sealcoat Levy • 12,107 Firefighter's Relief Levy • $4,307,990 General Operating Levy $5,024,041 Total 2016 Discretionary Levy Budget Factors: Personnel • 22 Regular Full -Time • 1.5% Cost of Living Adjustment to Matrix • Step Increases • 13 Employees Already at Maximum • 9 Employees Progressing thru Steps • General Fund Cost = $44,851 Salary Market Data • LMC On -Line Salary Survey • 14 Metro Cities (pop: 10,000 — 20,000) • Hugo Average Minimum Range: 0% • Hugo Average Maximum Range: 5% • Hugo Actual: 4% Chief's Retention Program • $0.50 per hour increase per year starting in 6thyear and capping at 1 0t" year • 1St step implemented in 2014 2"a step implemented in 2015 • 3rdstep budgeted in 2016 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 2015 Premiums • $188,726 due 2015 age Actual Premium • ($177,201) due 2014 Actual Premium $ 11,525 6.50% Increase • Increase due to age of group = 3.02% • Increase due to other factors = 3.48% 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 Anticipated Premium Increase • $199,869 • $188,726 $ 11,143 2016 Premium Estimate 2015 Actual Premium 5.9% Increase * General Fund budget contains an insurance reserve of $11,224 • $147,963 • $105,058 • $ 17,433 • $108,395 • $ 80.787 • $ 36,615 • $ 23,500 • $ 4,175 Other Revenues Franchise Fees License & Permit Fees Mobile Home Taxes & Penalties Intergovernmental Revenue Charges for Services Fines and Forfeits Investment Earnings Rentals & Miscellaneous $523,926 Non -Tax Levy Revenues 0 0 0 0 0 2016 Proposed Tax Levy 604,981 Debt Service & Abate Levy 539,657 CIP Levy 99,378 Park Improvement Levy 64,909 Sealcoat Levy 12,107 Firefighter's Relief Levy $4,307,990 General Operating Levy $5,629,022 Total 2016 Proposed Levy $5,717,021 Total 2015 Adopted Levy ($ 87.999) Levy Reduction 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 2015 Final 36.320% Pay 2016 Proposed 36.320% $ 2327700 $ 2297300 $ (16,297) $ (16,603) $ 2167403 $ 212,697 $ 27164 $ 27127 $ 785.97 $ 772.53 $ -13.44 State Property Tax Programs Homestead Credit Refund: Based on household income and property taxes paid Special Property Tax Refund: Net property tax on homestead must have increased by more than 12% and the increase must be $100 or more — no income limit Conclusions • Budget is balanced with no transfers in • The proposed tax levy keeps the urban tax rate the same • Buy down bonded debt while fully funding CIP Recommendations • Direct staff to prepare a preliminary tax levy resolution for consideration at the September 21St Council meeting that keeps the tax rate the same. 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 2015 Pay 2016 Pay 2016 Final Proposed With Investigator 36.320% 36.320% 37.184% $ 232,700 $ 229,300 229, 300 $ (16,297) $ (16,603) (16,603) $ 216,403 $ 212,697 212,697 $ 27164 $ 27127 2,127 $ 785.97 $ 772.53 790.90 $ -13.44 4.93 CITY OF HUGO Lions Park Project Revised Cost Estimate • WSB &Associates • February 25, 2015 • Estimate Range: $3,956,250 Low End $6,281,250 High End Estimates do not include street or storm water improvements Bonding Option • General Obligation Bonds Approved by Voters • Term not to exceed 30 years Bonding Option II • G.O. Tax Abatement Bonds (statutory limit as to annual abatement) • Term not to exceed 15 years (extended to 20 years if the county or school district declines to participate) Tax Abatement Bonds • In any one year, the TOTAL amount of abatement (for all issues) cannot exceed 10% of our net tax capacity • 10% of Net Tax Capacity = $1,460,311 • Pay 2016 = $302,617 • Pay 2017 = $304,083 • Pay 2018 = $445,313 • Pay 2019 = $447,392 Bonding Options & Restrictions • In either case, IRS regulations require that 85% of the bond proceeds be spent within the first 18 months • Excess interest earnings (arbitrage) must be rebated to the federal treasury Debt Service Levy By Year Payable P & • 2016 $1,696,235 • 2017 1,731,242 • 2018 1,763,058 • 2019 1,673,402 • 2020 1,707,636 • 2021 201,341 • 2022 190,912 Year of Collection $604,981 606,793 661,712 661,343 63,235 68,228 13,235 Buy Time • Cash flow the project with cash on hand • Adopt a reimbursement resolution declaring our intent to reimburse expenditures from bond proceeds (this is not a resolution authorizing bonds) • If bonds are issued, they must be issued not more than three years after the first expenditure is incurred (not including preliminary or engineering fees) Difficulties • Which funds to we use to cash flow expenses • $ 858,032 Park Funds (includes 2016 tax levy) • General fund reserves and/or utility funds? Risks • There is no guarantee that a future council will authorize bond issuance