05 09 Initial Budget Meeting 1
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, City Administrator
DATE: May 8, 2016
SUBJECT: 2017 Budget Discussion
On Monday, we will begin 2017 budget discussions. This meeting will focus on big picture, high-level
discussion versus budget requests and numbers; the draft budget will be provided later. The draft
budget will be developed around the tax levy, services and programs, goals, and policy direction the
Council provides along with staff’s estimates and budget requests for providing services and programs.
Below are the topics of discussion for Monday’s meeting with the main purpose being to review debt
and reserve fund financial analysis and to get input from the Council on 2017 goals and priorities.
Tax Levy:
The largest part of the City’s tax levy is for general operation of the City. In the 2016 levy, that
accounted for 70 percent of the $5,020,206 levy. Reserve fund levies made up 15 percent of the levy,
debt levies just under 13 percent, and tax abatement the around one percent.
Attached are cash flow spreadsheets for select reserve and debt funds with various funding scenarios
for discussion purposes only and to demonstrate the need for a long- term action plan. The actual levies
will likely be different than the amounts on the spreadsheets. We will review these projections and
funding scenarios in depth on Monday to get direction from the Council as we lay out a long-term plan
to finance debt and capital needs. Identifying debt and reserve fund levies will play a major role in
setting the levy amount and determining the tax revenue available to fund general operations.
Property Values:
As you know from the information the Wright County Assessor’s Office presented at the Board of
Review meeting, the market value is estimated to increase 9.85 percent based on early projections.
This increase includes $71,973,100 of new value. The additional new value allows the City to fund
increased costs associated with an increased demand for services associated with growth. It also
provides an opportunity to levy funds for future capital needs.
2
2017 Council Goals and Priorities:
Each year the City has a limited amount of revenue available to fund day-to-day operation of the City
and for capital improvement projects and equipment purchases. Thus, it is critical that the City identify
the services, programs, and projects of highest priority to ensure those receive sufficient funding and
have enough staff and equipment to sustain citizen and Council expectations. There may be projects or
programs that should receive more funding and others that could or should be reduced. One of the
City’s ongoing goals is to access the efficiency and effectiveness of City services thus the department
heads and I review the services provided to suggest better or less costly ways of doing business.
Another part of that goal is Council review of the services it wants to provide to its residents, identifying
new programs, service changes, and reducing or eliminating services/programs that are no longer
needed or valued by the residents. If there are any such changes that the Council wants for 2017, now is
the time to identify those items so that the changes can be incorporated in the draft 2017 budget.
This same is true for new programs or increases in services levels; if the Council wants to add programs
or improve service (for example plowing the streets in five hours instead of seven), please bring these
items up for discussion on Monday. Similar to 2016, staff is not recommending any significant new
programs or services but will include in the 2017 budget requests for additional funding to continue to
provide services to this growing city at the same level as in the past. Growth such as additional miles of
street/trail and the new Northwood Park require additional staff time and supplies but do not change
the services provided or the expected level of service. In essence, more funding is needed to provide
the same service because this is a fast growing city. The demands and requests from residents and
businesses are increasing along with that growth.
Budget Schedule:
The Council reviewed and concurred with the budget schedule presented at the last Council meeting. As
we approach August when the budget meetings begin with the Council, we can review the schedule and
adjust if needed.
Finally, no formal action is required at this first budget meeting. Rather, the department heads and I are
looking for your direction on priorities and expectations for 2017. We will discuss the tax levy in very
general terms along with funding scenario options for the various debt and reserve funds. This
information should be viewed as merely a starting point for discussions that will lead to setting the
proposed levy that will be adopted in September.
Attachments:
Tax Abatement Summary Data
Debt Service Cash Flow Analysis
Pavement Management Fund
Capital Equipment Revolving Fund
Capital Improvement Fund