ITEM 1P
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MINNESOTA
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, City Administrator
DATE: November 20, 2012
SUBJECT: Budget, Tax Levy, and Capital Improvement Plan (CIP) Review
Budget:
At the workshop on Monday we will begin with review of the water, sewer, and building safety
budgets. Please bring the budget material that was included in your November 13 packet to
Monday's meeting. The utility budgets are consistent with the data that was used in the utility
rate study presented on November 13. After review of those budgets, we will review the
General Fund budget again before public input and adoption of all budgets and the tax levy at
the December 10 meeting. Attached is a memo prepared by City Planner Licht on water shut-
off.
The Council reviewed the General Fund budget with staff in detail at several meetings before
adopting the maximum tax levy in September. No significant changes were made to the budget
by the Council during those meetings. Department heads will all be present at this Monday's
meeting to answer additional questions you have about any part of the budget. If budget
adjustments are made by the Council on Monday, they will be incorporated in the proposed
budget presented at the December 10 meeting.
The one item that was delayed in previous meetings is discussion of employee compensation.
There was a brief discussion at one budget meeting stating that there will be approximately
$35,000 of unspent funds in 2012 due to the mild winter that could be used to fund a 2013 pay
adjustment. Each one percent market rate adjustment to the pay plan costs approximately
$9,600. Attached for your reference is a survey of 2013 pay plan increases; the first page is a
survey of the comparison cities Otsego has traditionally and the second is a survey emailed on a
list serve that was conducted by another city. Unless noted, the pay plan increase on the
survey includes step increases for employees who are not at the top step of their pay plan. Of
course, every city must pay according what is appropriate for its unique situation while
remaining comparable to its city market comparisons. The other compensation item yet to be
addressed is the City's contribution to insurance benefits. As you know, the insurance
premiums are increasing less than one percent thus no increase in the insurance contribution is
recommended.
Tax Levy:
The parcel specific notices of proposed 2013 taxes were recently mailed to all property owners
by Wright County. As projected, the City tax on the lower value tier of homes decreases in
2013. This is consistent with the legislative changes that shifted more tax to higher value
homes and businesses. Wright County recently provided updated tax capacity estimates which
are very close to the original estimates provided to the Council during previous budget meeting.
In fact, the change is insignificant in calculating the impact on taxpayers. As you are well aware,
the Council may decrease the tax levy that is adopted in December, but it may not increase the
levy above the levy approved in September.
CIP:
The Council recently reviewed the draft 2013-2017 CIP and made several changes to various
projects included in the draft document. Finance Director Gary Groen's attached memo lists
the Council's changes and subsequent review by the Public Works subcommittee on a few
public works items. Please review the list of changes and inform staff at the meeting if there is
anything that isn't consistent with your direction or if we missed any of your changes. In
addition, attached is a memo from Parks and Recreation Manager Ross Demant that provides
an update on the soccer field development project that is included in the CIP. As you may
recall, the City was waiting for official action from TRSA on a contribution to the City for field
development. Finally, at Monday's meeting, staff is requesting input on any additional changes
the Council wants made before the CIP is adopted on December 10. Remember that each of
these items in the adopted CIP will come before you again for approval before the
project/purchase can be initiated.
Conclusion:
If you need new copies of the budget and tax levy information previously distributed, please
contact me. Further, if you have specific questions that require staff research, please contact
me as soon as possible so that we are prepared to answer your questions at Monday's meeting.
As I stated earlier, department heads will be present at Monday's meeting. We will go over the
budget again in as much detail as the Council requests.
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