2 - 2022 Budget, Tax Levy and Capital Imp Plan ReviewCity of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441-4414 Fax (763) 441-9163
TO: Mayor and City Council
FROM: Adam Flaherty, City Administrator & Finance Director
DATE: August 9, 2021
SUBJECT: Budget Meeting #4
On Monday, Council and staff will begin reviewing the draft 2022 General Fund budget, which was
distributed to the Council on August 6th. The draft budget is developed using a combination of
historical data and future projections based on anticipated operations for 2022. 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 2022. This action will take place at a regular Council
meeting, either on the 13th or the 27th 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.
Item 2.
City of Otsego│13400 90th Street NE, Otsego, MN 55330│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 $7,331,245, which is a 10.89% increase from the prior year.
The unassigned fund balance from year‐end 2020 is $5,410,002, or 74% of the draft general fund
budget for 2022. 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 $2,434,846 and will be reviewed by the City
Council.
The pending net fund balance after the transfer is $2,975,156, or 41% of the draft general fund
budget for 2022.
Revenues
The primary source of revenue within the General fund is property tax dollars which accounts for
68% of budgeted revenues. An increase of $309,000 (6.62%) 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 $719,788 (10.89%) 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 23 – At this meeting, staff and Council will be reviewing the detailed line‐item budgets for
General fund revenues and department expenditures.
August 30 – 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
Property Tax Levy Calculations
Payable 2022
Revised: August 6, 2021
$% $%
2020 2021 2022 Change Change 2022 Change Change Comment
General Revenues 4,518,000 4,671,000 4,942,000 271,000 5.80% 4,980,000 309,000 6.62%
Tax Abatements 56,491 45,874 40,422 (5,452) ‐11.88% 40,422 (5,452) ‐11.88%
Debt Service
Series 2010B 460,000 460,000 ‐ (460,000) ‐ (460,000)
Series 2018A 91,758 94,551 97,187 2,636 97,187 2,636
Series 2020A 195,000 195,000 450,000 255,000 450,000 255,000
**NEW** ‐ ‐ ‐ ‐ ‐ ‐
Sub‐total 746,758 749,551 547,187 (202,364) ‐27.00% 547,187 (202,364) ‐27.00%
Capital Reserves
Pavement Management 950,000 1,050,000 1,100,000 50,000 1,100,000 50,000
Trails Management 33,000 40,000 43,000 3,000 43,000 3,000
Parks Equipment 60,000 62,000 64,000 2,000 64,000 2,000
Capital Equipment Revolving 280,000 300,000 320,000 20,000 320,000 20,000
Fire Reserve 180,000 190,000 200,000 10,000 200,000 10,000
Storm Water 32,000 34,000 36,000 2,000 36,000 2,000
Capital Improvements 318,000 661,000 ‐ (661,000) ‐ (661,000)
City Buildings & Property 20,000 25,000 30,000 5,000 30,000 5,000
Sub‐total 1,873,000 2,362,000 1,793,000 (569,000) ‐24.09% 1,793,000 (569,000) ‐24.09%
Tax Rate Management (Flexibility) 1,004,186 966,186
Grand Total 7,194,249 7,828,425 8,326,795 498,370 6.37% 8,326,795 498,370 6.37%
Growth (%) 7.22% 8.82%
Tax Capacity 20,742,285 22,876,221 24,331,856 24,331,856 1% of Local Board of Appeal Estimate
Growth (%) 10.95% 10.29% 6.36% 6.36%
Net Tax Capacity 20,497,278 22,591,258 24,028,761 24,028,761 98.75% of Tax Capacity (Based on 2021)
Growth (%) 10.15% 10.22% 6.36% 6.36%
Tax Rate 35.099 34.653 34.653 34.653
Population 17,323 18,130 18,130 18,130 Source = MN State Demographer
Tax Levy Per Capita 415 432 459 459
Taxing 2020 2021 2022 2022
Authority Final Tax Rate Final Tax Rate Estimate Change Estimate Change
City of Otsego 35.099 34.653 34.653 0.00% 34.653 0.00%
Wright County 44.421 43.719 43.719 0.00% 43.719 0.00%
School District 34.371 31.717 31.717 0.00% 31.717 0.00%
School District ‐ RMV 29.961 30.598 30.598 0.00% 30.598 0.00%
Description 2020 2021 2022 Change 2022 Change
Median Appraised Value 247,859 258,455 290,081 12.24% 290,081 12.24%
Less: MV Exclusion (14,933) (13,979) (11,133) (11,133)
Taxable Market Value 232,926 244,476 278,948 14.10% 278,948 14.10%
Tax Capacity 2,329 2,445 2,789 2,789
2020 2021 2022 2022
Taxing Estimated Estimated Estimated Estimated
Authority Tax Tax Tax Change Tax Change
City of Otsego 818 847 967 14.17% 967 14.17%
Wright County 1,035 1,069 1,220 14.13% 1,220 14.13%
School District 801 775 885 14.19% 885 14.19%
School District ‐ RMV 743 791 888 12.26% 888 12.26%
Total 3,397 3,482 3,960 13.73% 3,960 13.73%
Annual Increase 478 478
Meeting #3 (6‐28‐2021) Meeting #4 (8‐9‐2021)
Levy Description
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
These are best estimates calculated by the
Finance Director based upon information
available at the time of presentation. These
should only be considered as estimates, and
should NOT be considered final.
X:\Budget\2022\Property Taxes\Tax Levy Calculations 8‐9
Department Page Completed Department Page Completed Department Page CompletedRevenues 2 City Administrator 7 Administration 9City Council 5 Assessing 12 Elections 11Legal 17 Finance 13 Prairie Center 20Emergency Management 30 Information Technology 15 City Hall & Public Works Building 22Animal Control 31 Human Resources 18 Old Township Site 24Streets 32 Police Services 25 Engineering 36Street Lights 37 Public Safety Commission 26 Park Maintenance 40Fleet Management 38 Fire Protection 27 Recreation 42Economic Development 48 Building Safety 28 Heritage Preservation Commission 44Parks and Recreation Commission 45Planning Commission 46Planning 47Interfund Transfers 50August 9 August 23 August 30X:\Budget\2022\2022 Budget Calendar