ITEM 1 B Budget meeting #40
OtCITY OF
0
MINNESOTA
TO: Mayor and City Council
FROM: Adam Flaherty, City Administrator & Finance Director
DATE: July 27, 2020
SUBJECT: Budget Meeting #4
On Monday, Council and staff will begin reviewing the draft 2021 General Fund budget, which was
distributed to the Council on July 24th. The draft budget is developed using a combination of
historical data and future projections based on anticipated operations for 2021. Each department
was responsible for submitting their respective budget requests. The City Administrator / Finance
Director held meetings with each respective department staff to thoroughly review the requested
budget prior to being included in the draft budget document.
There have been three special meetings scheduled for budget and tax levy review. Please note that
staff is seeking Council input during these budget review meetings in order to effectively and
efficiently move the budgeting process forward. These review meetings lead into September, where
the Council will need to adopt the preliminary property tax levy, which is the maximum amount the
City can levy for taxes payable 2021. This action will take place at a regular Council meeting, either
on the 14t' or the 28t' of September, depending upon Council direction.
I have developed an outline of discussion topics below.
Property Tax Levy
The Council and staff reviewed the debt service, tax abatements and capital reserve components of
the property tax levy during two June special City Council budget meetings. Attached with the
packet for this meeting, is an updated summary. Staff will review and explain any changes that have
occurred since the June reviews. Staff would be seeking Council consensus at each meeting
regarding the direction of the preliminary property tax levy amount.
City of Otsego 113400 90th Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-9163
Fund Summary
The draft budget is being presented as a balanced budget, with both revenues and expenditures
totaling $6,644,971, which is a 5.26% increase from the prior year.
The unassigned fund balance from year-end 2019 is $3,772,946, or 57% of the draft general fund
budget for 2021. 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 in
excess of the defined 45% minimum, can be transferred to a capital reserve fund at the Council's
discretion. This transfer calculated to be $932,244 and will be reviewed by the City Council.
The pending net fund balance after the transfer is $2,840,702, or 43% of the draft general fund
budget for 2021.
Revenues
The primary source of revenue within the General fund is property tax dollars which accounts for
70% of budgeted revenues. An increase of $170,000 (3.76%) in property tax levy is being proposed
within the draft budget.
The details of these revenues will be reviewed by staff and Council over the course of the three
scheduled budget review meetings.
Expenditures
Total expenditures within the draft budget increased $332,299 (5.26%) from the prior year budget.
The details of these expenditures will be reviewed by staff and Council over the course of the three
scheduled budget review meetings.
Next Meetings
August 10 — At this meeting, staff and Council will be reviewing the detailed line -item budgets for
General fund revenues and department expenditures.
August 24 — At this meeting, staff and Council will be reviewing the detailed line -item budgets for
General fund revenues and department expenditures.
Materials Attached for Discussion
1) Property Tax Levy Summary
2) Department Expenditure Review Schedule
City of Otsego 113400 90t' Street NE, Otsego, MN 55330 I Tel. (763) 441-4414 Fax (763) 441-9163
July 27
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X:\Budget\2021\2021 Budget Calendar
City of Otsego
Property Tax Levy Calculations
Payable 2021
Revised: July 21, 2020 Preliminary Tax Levy (6-22) Preliminary Taz Levy (7-27)
Levy Description 2016 2017 2018 2019 2020 2021 Change Change 2021 Change Change Comment
General Revenues 3,529,352 3,766,000 3,986,000 4,210,000 4,518,000 4,743,900 225,900 r-----5-C)—O%l 4,688,D00 170,000 r 3.76%
Tax Abatements 88,814 81,385 65,546 60,816 56,491 45,874 (10,617)—'/.1 45,874 (10,617)
Debt Service
Series 2010D & Series 2011A
225,000
225,000
215,000
205,000
195,000
195,000
-
195,000
-
Series 2010B
415,000
430,000
440,000
450,000
460,000
460,000
-
460,000
-
Series 2018A
-
-
-
79,293
91,758
94,551
2,793
94,551
2,793
Sub -total
640,000
655,000
655,000
734,293
746,758
749,551
2,793 0.37%1
749,551
2,793 0.37%
Capital Reserves
Pavement Management
339,200
475,960
600,000
800,000
950,000
1,050,000
100,000
1,050,000
100,000
Trails Management
25,250
26,000
30,000
32,000
33,000
- 34,000
1,000
34,000
1,000
Parks Equipment
54,590
55,000
56,000
58,000
60,000
°+ 62,000
2,000
62,000
2,000
Capital Equipment Revolving
168,000
235,200
242,256
260,000
280,000300,000
20,000
300,000
20,000
Fire Reserve
150,000
150,000
160,000
170,000
180,000
190,000
10,000
190,000
10,000
Storm Water
25,000
25,000
26,000
30,000
32,000
34,000
2,000
34,000
2,000
Capital Improvements
-
160,200
282,500
355,000
318,000
386,000
68,000
441,900
123,900
City Buildings & Property
-
-
-
-
20,000
25,000
5,000
25,000
5,000
Sub -total
762,040
1,127,360
1,396,756
1,705,000
1,873,000
2,081,000
208,000 11.11%1
2,136,900
263,900 14.09%
Grand Total
5,020,206
5,629,745
6,103,302
6,710,109
7,194,249
7,620,325
426,076 r-----5-9-2%l
7,620,325
426,076 592%
Tax Capacity
13,238,424
14,873,116
16,783,003
18,695,511
20,742,285
22,048,692
22,048,692
Growth (%)
16.55%
12.35%
12.84%
11.40%
10.95%
6.30%
6.30%
Net Tax Capacity
13,238,424
14,872,821
16,696,008
18,608,540
20,497,278
21,717,962
21,717,962
Growth (%)
16.55%
12.35%
12.26%
11.46%
10.15%
5.96%
5.96%
Tax Rate
37.921
37.852
36.556
36.060
35.099
35.088
35.088
Population
14,968
15,472
16,019
16,605
17,323
18,130
18,130
Tax Levy Per Capita
335
364
381
404
415
420
420
Taxing
2016
2017
2018
2019
2020
2021
2021
Authority
Final Tax Rate
Final Tax Rate
Final Tax Rate
Final Tax Rate
Final Tax Rate
Estimate
Change
Estimate
Change
-ity of Otsego
37.921
37.852
36.556
36.060
35,099
35.088
-0.03%
35.088
-0.03%
rtiright County
39.970
39.599
39.946
44.273
44.421
44.421
0.00%
44.421
0.00%
School District
39.266
36.659
36.137
32.865
34.371
34.371
0.00%
34.371
0.00%
ichool District - RMV
19.441
19.373
19.422
19.430
29.961
29.961
0.00%
29.961
0.00%
Ilan Appraised Value
198,300
217,206
220,572
247,859
258,455
4.28%
258,455
4.28%
: MV Exclusion
(19,393)
(17,691)
(17,389)
(14,933)
(13,979)
(13,979)
ible Market Value
178,907
199,515
203,183
232,926
244,476
4.96%
244,476
4.96%
Capacity
1,799
1,995
2,032
2,329
2,445
2,445
2017
2018
2019
2020
2021
2021
Taxing
Estimated
Estimated
Estimated
Estimated
Estimated
Estimated
,uthority
Tax
Tax
Tax
Tax
Tax
Change
Tax
Change
of Otsego
677
729
733
818
858
4,89%
858
4.89%
;htCounty
708
797
900
1,035
1,086
4.93%
1,086
4.93%
>ol District
656
721
668
801
840
4.87%
840
4.87%
>ol District - RMV
384
422
429
743
774
4.17%
774
4.17%
l
2,425
2,669
2,730
3,397
3,558
4.74%
3,558
4.74%
uallncrease
161
161
Estimated at 1% of County Provided Value
Estimated at 98.50% of Tax Capacity
Source = MN State Demographer
The City rate is calculated by the Finance
Director. County and School District tax rates
were obtained from Wright County, and
represent the tax rate from their respective
preliminary levies and are NOT FINAL.
Source = Wright County Assessor
are best estimates calculated by the
:e Director based upon information
ale at the time of presentation. These
I only be considered as estimates, and
I NOT be considered final.
X:\Budget\2021\Property Taxes\Tax Levy Calculations
7-27