1 - Council Memo (8-08-2022)
City 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 8, 2022
SUBJECT: Budget Meeting #4
On Monday, Council and staff will begin reviewing the draft 2023 General Fund budget, which was
distributed to the Council on August 5th. The draft budget is developed using a combination of
historical data and future projections based on anticipated operations for 2023. 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 to move the budgeting
process forward effectively and efficiently. 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 2023. This action will take place at a regular Council meeting, either
on the 12th or the 26th 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│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 $7,871,939, which is a 7.14% increase from the prior year.
The unassigned fund balance from year‐end 2021 is $4,572,627, or 58% of the draft general fund
budget for 2023. 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. This transfer calculated to be $1,266,290 and will be reviewed by the City
Council.
The pending net fund balance after the transfer is $3,306,337, or 42% of the draft general fund
budget for 2023.
Revenues
The primary source of revenue within the General fund is property tax dollars which accounts for
67% of budgeted revenues. An increase of $262,000 (5.23%) 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 $524,523 (7.14%) 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 22 – At this meeting, staff and Council will be reviewing the detailed line‐item budgets for
General fund revenues and department expenditures.
August 29 – 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) Department Expenditure Review Schedule
2) Public Works Budget Narrative
3) Property Tax Levy Summary