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Home My WebLink About2016.12.05 CC PowerPoint Budget HearingCITY OF HUGO 2017 Budget and Tax Levy Presentation � CI-F'Y' C)F �' — EST. 1906 Presentation Topics • 2016 Tax Rate Comparisons • Proposed Tax Levy for 2017 • Tax Levy Items • General Fund Budget • Proposed Urban Tax Rate for 2017 • Tax on Median Value Homestead • Recommendations Median Residential Homestead Taxable Market Value — Pay 2016 • $222,500 Median Value Homestead Pay 2016 One-half of the residential homesteads have a taxable market value less than $222,500 One-half of the residential homesteads have a taxable market value more than $222,500 Comparative 2016 Tax Rates • Average City Tax Rate (all 853 cities in Minnesota) ............................. 46.520% • Actual Average LGA ............ $608,907 • Tax on $222,500 Homestead = $ 954.99 • City of Hugo's Urban Tax Rate ..36.323% • Actual Local Government Aid ... $0 • Tax on $222,500 Homestead = $ 745.66 Tax Difference of $209.33 Tax Difference of 22% Comparative 2016 Tax Rates • Average City Tax Rate (27 cities in 7 County Metro Area 10,000 — 24,999 Pop) ........ 46.960% • Average Actual LGA ................ $669,310 • Tax on $222,500 Homestead = $964.02 • City of Hugo's Urban Tax Rate ... 36.323% • Actual Local Government Aid .....$0 • Tax on $222,500 Homestead = $745.66 Difference of $218.36 Difference of 23% Comparative 2016 Tax Rates Cities in Washington County Oak Park Heights ......... 57.7253% Stillwater .................... 57.4251 % LGA = $645,603 Forest Lake ................ 43.3850% LGA = $ 73,162 Cottage Grove ............. 43.1397% LGA = $ 75,362 Oakdale ..................... 39.4915% LGA = $140,448 Scandia ..................... 36.7221 % LGA = $ 241 Hugo ........................ 36.3229% Woodbury .................. 35.2869% Mahtomedi .................. 34.6575% LGA = $ 212 Lake Elmo ..................23.1209% Local Government Aid • $519,398,012 Total Distribution in 2016 • $ 77,805,255 Minneapolis • $ 62,337,589 St. Paul • $ 29,264,120 Duluth • 84 Cities/Towns Do Not Receive LGA • Town of Funkley = $36 (pop. 5) Flat Tax Rate • City tax collections increase when property values increase • City tax collections decrease when property values decrease 0 Ll Market Value Changes — Pay 2017 ($ 1,417,575) Agricultural 5,228,900 Apartments (includes sr. rental) 805,800 Commercial/Industrial 54,113,675 Residential $ 58,730,800 Market Value Increase 1.9% Existing Properties 2.0% New Construction 3.9% Increase in Market Value Ll Median Residential Homestead Taxable Market Value $222,500 Median Value Homestead Pay 2016 $228,800 Median Value Homestead Pay 2017 $ 6,300 Increase of 2.83% Tax Levy (flat tax rate) • $5,926,479 Pay 2017 Levy (proposed) 2017 Proposed Tax Levy $5,926,479 606,793) Total Proposed Levy Required Tax Levy • $5,319,686 Discretionary Tax Levy Debt Service & Abatement Levy • $ 83,390 Improvement Bonds of 2009 • $104,288 Tax Abatement Bonds of 2009 • $ 89,509 Cl P Bonds of 2010 • $ 63,311 Improvement Bonds of 2011 • $ 66,500 CIP Portion of Crossover Bonds • $199,795 Abate Portion of Cross Bonds $606,793 Debt Service Levy for 2017 Debt Service Levy By Year Payable P & I • 2017 1,731,242 • 2018 1,763,058 • 2019 1,673,402 • 2020 1,707,636 • 2021 201,341 • 2022 190,912 Tax Levy 606,793 624,706 621,245 63,235 68,228 13,235 • $ 485,000 • $ 390,000 • $ 425,000 • $ 265,000 • $ 885,000 • $4)775)000 $ 8,795,000 Gross City Bonded Debt Improvement Bonds of 2007 (4.0 - 4.15) Imp Bonds of 2009 (3.25 - 3.875) Tax Abatement Bonds of 2009 (3.0) Capital Imp Bonds of 2010 (2.25 — 2.5) Improvement Bonds of 2011 (2.0 — 3.0) Crossover Bonds of 2013 (0.65 — 1.15) $ 7,225,000 Gross Bonded Debt at 12/01/16 $ 8,795,000 Gross Bonded Debt at 12/01/15 $1,570,000 Paid in 2016 2017 Proposed Tax Levy • 606,793 Debt Service & Abate Levy • 539,657 CIP Levy • 94,923 Park Improvement Levy • 64,909 Sealcoat Levy • 13,742 Firefighter's Relief Levy • $4,606,455 General Operating Levy $5,926,479 Total 2017 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 • $539,657 Pay 2017 (Proposed) STREET CONSTRUCTION FUNDS Beginning Fund Balance REVENUES: Property Tax Levy - CIP Property Tax Levy - Extra Levy Capacity Special Assessments State Aid EXPENDITURES: Current Project: 147th Street/Oneka Lake Blvd Comprehensive Plan Update Priority 1: Homestead Ave, 132nd St Priority 2: Oneka Lake Blvd, Harrow Priority 3: 125th, Heather, Upper Heather Priority 4: 128th & 159th Neighborhoods Priority 5: Fountain, Foxhill Priority 6: 147th, Fitzgerald, Finale, 145th, 146th Priority 7: Fenway Ave, Fenway Blvd Priority 8: Oneka Pkwy, Heritage Pkwy 2016 2017 2018 2019 2020 2021 $ 2,476,591 $ 2,422,648 $ 955,299 $ 287,068 $ 1,483,235 $ 1,054,148 $ 539,657 $ 539,657 $ 539,657 $ 539,657 $ 539,657 $ 539,657 $ 558,010 $ 553,017 $ 246,265 $ 104,411 $ 137,961 $ 139,127 $ 134,497 $ 102,975 $ 548,135 $ 517,383 $ 517,383 $ 517,383 $ 517,383 $ 517,383 $ (1,388,000) $ (17,800) $ (2,611,000) $ (1,863,232) $ (2,178,634) $ (1,638,612) Ending Fund Balance $ 2,422,648 $ 955,299 $ 287,068 $ 1,483,235 $ 1,054,148 $ 1,128,568 Park Improvement Levy • $296,000 Original Park Levy • (104,288) Tax Abatement Bond Levy • ( 96,789) Park Planning & Programming $ 94,923 Net Park Levy for 2017 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 • $183,225 x 7.50% _ $13,742 • Place in separate special revenue fund • No mandatory contribution required in 2017 Equipment Replacement $ 185,000 Replace Snow Plow in 2017 (#202-07) 75,000 Masonry Monument Sign 50,000 Replace Jeep Brush Rig #11 35,000 Modify JD Ditch Mower (#317-06) 35,000 35,000 18,000 17,000 15,000 11095,500 Replace PW Pickup in 2017 (#102-07) Replace PW Pickup in 2017 (#114-07) Skid Steer Trade -Up &Attachments Replace SCBA Tanks (3 -year plan) Replace JD 72" Park Mower (#301-08) Equipment Needs 2018 thru 2021 $ 1,560,500 Total Equipment Purchases Equipment Replacement $1,112,985 Funds on Hand 01/01/17 0 2017 Tax Levy 111,879 2018 Tax Levy 111,879 2019 Tax Levy 111,879 2020 Tax Levy 111,879 2021 Tax Levy $ 1,560,501 Funds Thru 12/31/21 $ 1,560,500 Equipment Needs 2017 General Operating Levy • $4,606,455 General Operating 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 • 2.0% Cost of Living Adjustment to Matrix • Step Increases • 14 Employees Already at Maximum • 8 Employees Progressing thru Steps • General Fund Cost = $49,007 Wages • General Fund Cost = $ 7,425 Taxes Salary Market Data • LMC On -Line Salary Survey • 15 Metro Cities (pop: 10,000 — 20,000) • Hugo Average Minimum Range: -2% • Hugo Average Maximum Range: 3% 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 2nd step implemented in 2015 • 3rdstep implemented in 2016 • 4thstep budgeted in 2017 2017 Premiums • $227,858 2017 to Actual of group Premium • ($215,039) 2016 Actual Premium $ 12,819 5.96% Increase • Increase due to age of group = 2.15% • Increase due to other factors = 3.81 High Deductible Health Plan • $1,750 deductible for single contract • $3,500 deductible for family contract • Cumulative deductible (all employees on the group) _ $50,750 • $2,000 deductible for single contract • $4,000 deductible for family contract • Cumulative deductible (all employees on the group) _ $58,000 HSA Contributions $250 x 5 = $ 1,250 $500 x 12 = $ 6,000 $ 7,250 in Budget Document General Fund Budget • Budget Document Contains 485 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: • $ 121,376 Investigator Position • 26,007 Law Enforcement Increase • 56,432 Step Increases & COLA • 41,362 PW Apprentice • 51,205 Comp Plan Updates • 14,895 Card Reader System • 10,000 Fire Dept. Wellness Program General Fund Budget • $ 5,206,170 2017 Budget • $ 4,845,427 2016 Budget • 360,743 7.4% Increase • $ 5,206,170 2017 Budget • $ 4,606,455 From Property Taxes (88%) • 599,715 From Other Sources (12%) • $154,330 • $104,658 • $ 12,210 • $164,743 • $103,769 • $ 36,615 • $ 17,400 • $ 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 $599,715 Non -Tax Levy Revenues 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 • Pay 20 " • Pay 20 • Pay 20 • Pay 20 • Pay 20 • Pay 20 • Pay 20 • Pay 20 • Pay 90 Disparities Distribution W1 = 10= 11= 12= 13= 14= 15= 16= 17 = $490)589 $556,789 $602,566 $576,529 $535,259 $531,665 $518,463 $547,656 $603,076 +13.49% + 8.22% - 4.32% - 7.16% - 0.67% - 2.48% + 5.63% +10.12% After Fiscal Disparities $5,926,479 Proposed 2017 Tax Levy $ 603,076 From Fiscal Disparities $5,323,403 Paid by Local Taxpayers • Urban Tax Rate Will Remain the Same • Rural Tax Rate Will Decline 0.03% Tax Impact Total Urban Tax Rate City Tax on Median Value Homestead: Median Taxable Homestead Tax Capacity Net Tax Dollar Change Pay 2016 Final 36.323% $ 222,500 $ $ 2,053 $ $ 745.66 $ Pay 2017 Proposed 36.323% 2,122 770.61 24.95 3.35% Comparative 2017 Tax Rates Cities in Washington County Stillwater .................... 57.223°/o Oak Park Heights ......... 56.271 Forest Lake ................ 43.417% Cottage Grove ............. 42.942% Oakdale ..................... 39.819% Mahtomedi .................. 37.560% Scandia ..................... 36.607% Hugo ......................... 36.323% Woodbury .................. 35.102% Lake Elmo .................. 20.884% Urban Tax Rate in ISD 624 TIIL UNIVE got B53618231 L 5% 38% Other City 25% 32% 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 State Property Tax Programs Homestead Credit Refund: Must own and occupy home on January 2, 2017 Based on household income and property taxes paid. Maximum refund in 2016 = $2,640 Forms available at www.revenue.state.mn.us State Property Tax Programs Special Property Tax Refund: Must own and occupy home on January 2, 2016 and January 2, 2017 Net property tax on homestead must have increased by more than 12% and the increase must be $100 or more. 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 Recommendations Open up public hearing Take comment Close public hearing Council discussion Consider adoption of final budget and tax levy resolutions