ITEM 1 Budget Kickoff MeetingI
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TO: Mayor and City Council
FROM: Adam Flaherty, City Administrator & Finance Director
DATE: May 26, 2020
SUBJECT: Budget Kickoff Meeting
On Tuesday, Council and staff will begin the 2021 budgeting discussions. This meeting is intended
to focus on the big -picture and not specific departmental budget requests. I have developed an
outline of discussion topics below, however; the most important aspect of this meeting is to provide
the opportunity for the Council to set priorities, set expectations and to provide direction to staff for
preparation of the draft budget.
Council Roundtable
This is an opportunity for the Council to express their current view on City services and programs.
This would also be the time for the Council to share any comments they have received from the
public regarding City services or programs. Please use this opportunity to outline your priorities and
expectations for the 2021 budgets.
Staff Preview
This portion of the meeting will provide the opportunity for City management to preview their
respective department budget plans for 2021. It will be important for the City Council to provide
direction to staff for preparation of the draft budget.
Property Tax Lew
At this time of the year, much of the information being used is estimates. Based upon the
information currently available from Wright County, the City's net tax capacity for the 2021 tax
levy will increase approximately 5.96%.
City staff will review a number of property tax summaries, including for payable 2021 and
projections for the future.
The City's tax rate for 2020 is 35.099. Staff will review a number of charts comparing the Otsego
tax rate with those of surrounding cities in Anoka, Hennepin, Sherburne and Wright counties. The
City Council should discuss their approach to the tax rate for payable 2021.
City of Otsego 113400 90' Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-9163
Assumptions
The most significant assumption within the General fund budgeting process is those in relation to
personnel. It is important for this assumption to be clearly defined at the beginning of the budgeting
process. In past years, assumptions for personnel costs have included a combination of informal
salary surveys obtained by City staff, inflation indices, and employment cost indices.
The City's pay plan for full-time employees includes 21 grades, each with 9 steps. The percentage
increase for each step within a pay grade is 2.75%. Employees who reach the highest step within
their pay grade do not move to the next grade. There are 12 employees at the City projected at their
maximums for 2021.
Fund Balance Policy — Calculation of Transfer
The City's fund balance policy outlines that the ending fund balance in the General Fund should be
45% of the subsequent years budget. The policy further outlines that any balance more than the
defined 45% minimum, can be transferred to a capital reserve fund at the Council's discretion.
Next Meetings
June 8 — At this meeting, staff and Council will review the proposed budgets, proposed tax levies
and cash flow projections for the special revenue and debt service funds.
June 22 — At this meeting, staff and Council will review the proposed tax levies and cash flow
projections for the capital project funds.
Materials
All materials will be presented electronically at the meeting.
City of Otsego 113400 90' Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-9163