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Home My WebLink About2015.12.07 CC PowerPoint Budget HearingCITY OF HUGO 2016 Budget & Tax Levy Presentation Presentation Topics • 2015 Tax Rate Comparisons • Proposed Tax Levy for 2016 • Tax Levy Items • General Fund Budget • Proposed Urban Tax Rate for 2016 • Tax on Median Value Homestead • Recommendations Median Residential Homestead Taxable Market Value — Pay 2015 • $228,100 Median Value Homestead Pay 2015 One-half of the 4,259 residential homesteads have a taxable market value less than $228,100 One-half of the 4,259 residential homesteads have a taxable market value more than $228,100 Comparative 2015 Tax Rates • Average City Tax Rate (all 852 cities in Minnesota) ............................. 46-898% • Actual Average LGA ............ $606,688 • Tax on $228,100 Homestead= $1,069.74 • City of Hugo's Urban Tax Rate ..36.318% • Actual Local Government Aid ... $0 • Tax on $228,100 Homestead= $828.41 Tax Difference of $241.33 Tax Difference of 23% Comparative 2015 Tax Rates • Average City Tax Rate (30 cities in 7 County Metro Area 10,000 — 24,999 Pop) ........ 43.841 • Average Actual LGA ................ $596,855 • Tax on $228,100 Homestead = $1,000.01 • City of Hugo's Urban Tax Rate ... 36.318% • Actual Local Government Aid .....$0 • Tax on $228,100 Homestead = $828.41 Difference of $171.60 Difference of 17% 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% Flat Tax Rate • City tax collections increase when property values increase • City tax collections decrease when property values decrease 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 • $ (308,885) Tax Capacity Decrease (2.12%) rij 11 Median Residential Homestead Taxable Market Value $228,100 Median Value Homestead Pay 2015 $222,500 Median Value Homestead Pay 2016 $ 5,600 Reduction of 2.5% Tax Levy (flat tax rate) • $5,717,021 Pay 2015 Levy • $5,634,071 Pay 2016 Levy (proposed) 82,950 Decrease 2016 Proposed Tax Levy $5,634,071 604,981) Total Proposed Levy Required Tax Levy • $5,029,090 Discretionary Tax Levy 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 or Crossover Bonds • $200,429 Abate Portion of Cross Bonds $604,981 Debt Service Levy for 2016 Debt Service Levy By Year Payable P & I • 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 Tax Collections Collected Within the Fiscal Year of Levy 2005 = 98.40% 2012 = 98.19% 2006 = 98.03% 2013 = 98.29% 2007 = 96.79% 2014 = 98.60% 2008 = 96.83% 2009 = 97.12% 2010 = 96.14% 2011 = 96.32% 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 12/01/15 $ 1,040,000 Capital Improvement Bonds 4,795,000 Tax Abatement Bonds rij rj rij City Bonded Debt (Net) $ 72,531 Improvement Bonds of 2007 $ 390,652 Improvement Bonds of 2009 $ 422,442 Tax Abatement Bonds of 2009 $ 198,100 Capital Imp Bonds of 2010 $ 757,286 Improvement Bonds of 2011 • $ 3,789,919 Crossover Refund Bonds of 2013 $ 5,670,930 Net Bonded Debt at 12/01/15 City Bonded Debt (Per Capita) 2015: $5,670,930/14,201 = $ 399 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 319,551) Funds on Hand $ 1,115,449 Net Debt Subject to Debt Limit *Capital Imp Bonds Portion of Issue Statutory Debt Limit • $1,423,894,000 Taxable Market Value x 3% • $ 42,716,820 Statutory Debt Limit • $ 1, 115,449 City Debt Subject to Limit • 97% Unused Debt Limit 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 • $4,313,039 General Operating Levy $5,634,071 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) ■ a al Imp P STREET CONSTRUCTION FUNDS 2015 2016 2017 Beginning Fund Balance REVENUES: Property Tax Levy - CIP Delinquent Tax Collections Investment Earnings Special Assessments - South Egg Lake Special Assessments- Fable Hill Bridge Special Assessments - Rosemary Way Special Assessments - Property Demolitions Special Assessments - 165th Street Special Assessments - Rice Lake Meadows Special Assessments - Oneka Lake Blvd Special Assessments - Homestead Avenue Special Assessments - Oneka Lake Blvd/Harrow State Aid EXPENDITURES: Update Cost Estimates Rosemary Way Construction CSAH 7 & 8 Intersection Construction Inspections Rice Lake Meadows Reconstruction Contract 129th Street (330' paved by Lino Lakes) Oneka Lake Blvd Homestead Ave/132nd Street/Homestead Drive Oneka Lake Blvd/Harrow Ave 125th/Heather & Upper Heather Ave Reclamation $ 1,919,966 $ 2,247,501 $ 2,092,737 $ 539,657 $ 886 $ 14,212 $ 21,505 $ 39,446 $ 571,995 $ 2,926 $ 8,482 $ 57,400 $ 476,917 $ (3,500) $ (144,570) $ 20,559 $ (1,263,406) $ (14,974) $ 539,657 $ 539,657 $ 17,545 $ 16,863 $ 15,326 $ 14,748 $ 2,816 $ 2,706 $ 5,976 $ 5,795 $ 72,555 $ 65,753 $ 15,860 $ 492,361 $ (1,301,000) Ending Fund Balance $ 2,247,501 $ 2,092,737 $ 484,639 $ (2,284,055) $ 954,703 2018 $ 954,703 $ 539,657 $ 16,181 $ 14,170 $ 2,597 $ 5,614 $ 63,743 $ 15,860 $ 26,690 $ 484,639 $ (1,863,232) $ 260,622 Park Improvement Levy $296,000 Original Park Levy ( 102,188) Tax Abatement Bond Levy ( 94,434) Park Planning & Programming $ 99,378 8771706 Net Park Levy for 2016 Est. Fund Balance 01/01/16 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 $ 939,999 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 $ 1,256,604 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 • $4,313,039 General Operating Levy $5,029,090 Total 2016 Discretionary 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 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 = $46,026 Salary Market Data • LMC On -Line Salary Survey • 15 Metro Cities (pop: 10,000 — 20,000) • Hugo Average Minimum Range: -1 • Hugo Average Maximum Range: 4% 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 • 3rdstep budgeted in 2016 2016 Premiums • $194,420 due to age 2016 Actual = 1.12% Premium • ($187,803) to 2015 2.40% Actual Premium $ 6,617 3.52% Increase • Increase due to age of group = 1.12% • Increase due to other factors = 2.40% High Deductible Health Plan • $1,500 deductible for single contract • $3,000 deductible for family contract • Cumulative deductible (all employees on the group) _ $40,500 • $1,750 deductible for single contract • $3,500 deductible for family contract • Cumulative deductible (all employees on the group) _ $47,250 General Fund Budget • Budget Document Contains 472 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 Large Variations: • $ 68,131 Restore Com Dev Assistant • 46,026 Step Increases & COLA • 13,590 Payroll Taxes & Insurance • 50,000 Concrete Replacement • 12,629 Elections • 12,000 Outsource Laser Fiche • 13,102 Law Enforcement Contract $ 215,478 General Fund Budget $ 4,845,427 2016 Budget $ 4,632,900 2015 Budget 212,527 4.6% Increase $ 4,845,427 2016 Budget $ 4,313,039 From Property Taxes (89%) 532,388 From Other Sources (11 %) • $148,730 • $105,268 • $ 17,433 • $115,867 • $ 79,675 • $ 35,925 • $ 23,500 • $ 5,990 Other Revenues Franchise Fees License & Permit Fees Mobile Home Taxes & Penalties Intergovernmental Revenue Charges for Services Fines and Forfeits Investment Earnings Rentals & Miscellaneous $532,388 Non -Tax Levy Revenues 2016 Proposed Tax Levy • 604,981 Debt Service & Abate Levy • 539,657 CIP Levy • 0 Capital Equipment Levy • 99,378 Park Improvement Levy • 64,909 Sealcoat Levy • 12,107 Firefighter's Relief Levy • $4,313,039 General Operating Levy $5,634,071 Total 2016 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% • Pay 2016 = $547,656 + 5.63% After Fiscal Disparities $5,634,071 Proposed 2016 Tax Levy $ 547,656 From Fiscal Disparities $5,086,415 Paid by Local Taxpayers • Urban Tax • Rural Tax Rate Will Remain the Same Rate Will Decline 0.12% Tax Impact Total Urban Tax Rate City Tax on Median Value Homestead: Median Taxable Homestead Tax Capacity Net Tax Dollar Change Pay 2015 Final 36.318% $ 228,100 $ $ 2,281 $ $ 828.41 $ Pay 2016 Proposed 36.318% 222,500 2,225 808.08 20.33 Tax Changes by Homestead Parcel • 4,264 Total Residential Homestead Parcels • 4,064 Parcels (95%) with declining City tax • 200 Parcels (5%) with city tax increase Comparative 2016 Tax Rates Cities in Washington County Oak Park Heights ......... 57.7057% Stillwater .................... 57.4156% LGA = $645,603 Forest Lake ................ 43.3474% LGA = $ 73,162 Cottage Grove ............. 43.1276% LGA = $ 75,362 Oakdale ..................... 39.3150% LGA = $140,448 Scandia ..................... 36.7099°/o LGA = $ 241 Hugo ......................... 36.3177% Woodbury .................. 35.4349% Mahtomedi .................. 35.0296% LGA = $ 212 Lake Elmo .................. 27.1769% Urban Tax Rate in ISD 624 TIIL UNIVE got B53618231 L 5% 37% Other City 27% 31% Schools County 13 Tax Rates • City — Urban Tax Rate • City — Rural Tax Rate • 4 School Districts • 3 Watershed Districts • County • Met Council • Metro Mosquito Control • County HRA & RRA Waw Arwwn �=:;Coim-Ay Friipua! Tin dim HC c:lhliwl Ji.lrwvqL%-Aa IPJ.-Vpertks �m 2A5 M Preiput" 2MLJ RdP 2Z - 1 L At JF WKT T.r IC —vi Wr 4. State Property Tax Programs Homestead Credit Refund: Must own and occupy home on January 2, 2016 Based on household income and property taxes paid. The 2016 limits are not available yet; for 2015 the total household income must have been less than $107,150. The 2015 maximum refund was $2,620. Forms available at www.revenue.state.mn.us State Property Tax Programs Special Property Tax Refund: Must own and occupy home on January 2, 2015 and January 2, 2016 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 State Property Tax Programs Senior Citizen Property Tax Deferral: Allows people 65 years of age or older, whose household incomes are $60,000 or less, to defer a portion of their property tax on their home. This is not a tax forgiveness program — it is a low interest loan from the state. Interest will be charged and a lien will attach to the property. 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) Budget is balanced with no transfers in 4) Urban tax rate remains the same 5) 95% of residential homestead properties will see a tax decrease Recommendations Open up public hearing Take comment Close public hearing Council discussion Consider adoption of final budget and tax levy resolutions