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ITEM 6.1Request for ot s"'ego City Council Action MINNESOTA DEPARTMENT TMENT I FO ATIO :.......,:.,.w:....n:..�::_:.n_..,..,.n.:-.......:..:...........:.._:n.:..:.:..:.:.::n-:.:....:.:.v..-.....:.....N.....N.....,......,.,,..v,.,.....,..,.v....... ,n,_....,.v_w MN..,...,,-.,,,...N..,...._,x........-....,..x......n.._._n.....:.._.....:................,n.M...,.-:,,v_nnN..m,..,n.,N,v,.,.,.._ r........ ..................... _ Y ........................ .......................... .- ..... ... ........ ....-... IIIIATItrI DEPAFTI�IT: #Et�L1ESTOF�: IE�TIhl [SATE: Administration Lori Johnson, City Administrator December 10,. 2012 PI ESENTE# ): REVIEWED BY; ITEM Lori Johnson, City Administrator 6.12013 Tax Levy and Budget AGENDA ITEM DETAILS RECOMMENDATION: Review proposed 2013 budget and tax levy Receive and consider input from public on 2013 tax levy and budget Adopt Resolution 2012-84 Setting a Final Tax Leery for 2013 Budget Appropriations Approve 2013 budgets for the General, Bu1Idi ng S afety, water, and Sewer funds. ARE YOU SEEKING APPROVAL of A CONTRACT? IS A PUBLIC HEARING REQUIRED? UIRED? No No, although public input must be taken on the budget and tax levy. BACKGROUNDIJUSTIFI ATION: In September the City Council approved a proposed lever that was used to calculate the estimated takes for the parcel specific notices sent to property owners by Wright County in November. That proposed levy of $4,,377,.910 was based on debt service, capital, and operating needs as proposed in the draft budget. The Council held several budget workshops to review the proposed budget and make adjustments to the budget and tax logy. Those changes are reflected in the tax levy and budget that will be presented at this final budget meeting. The Council must adopt a final levy for certification to the county before December 28. The final levy may be less, but not more, than the levy adopted in September. Further, public input must be received and considered on December 10 before adoption of the find budget and tax levy. This memo provides an overview of the tax lever and budgets as proposed and reviewed by the City Council over the past several months. Detailed budget information can be found in the draft budget distributed earlier. At the Council meeting, staff will present the budget and lever in summary form before opening the meeting to the public for their input. Property Tax Levy The proposed tae levy of $4.,377,910 is an increase of 2,74 percent or $x.16,910 above the 2012 levy. The General Fund levy increases gory slightly; $48,280 or 1.5 percent, The General Fund accounts for the majority of the City's day to day operations such as public safety, culture and recreation, general government, community development, and street maintenance functions. The remaining levy increase of $68.,630 is due to an increase of $5,365 in the tax abatement levy, $5,000 In the fire service levy, and $57,765 in the storm water levy. Prerty value - Taxable Tax Capacity Amajor factor in determining the amount of property tx a property owner will pay is the property's value and that year's change in the property's value. If all property values decrease proportionately (and no new construction value is added), and the levy stays the same, the tax that iaach property owner pays will stay the sane. The same is true if the values increase the same amount and the levy stays the same, the tax on each parcel will stay the same as the prior year. of course, not all property values Increase or decrease proportionately; some years, most, although not all, residential values decrease and most, although not all, commercial values stay constant. In those cases, even with a levy increase, lower value homes will pay less tax pushing that tax to the higher valued homes and businesses. This was due partly to the dramatic decreases in low to middle value residential property and the implementation of the market et valine exclusion law. Another factor that affects the allocation of the property taxis the new value that is added that year. Depending upon the value of the new construction, the levy can increase with no additional tax on existing properties as was the case before the economic downturn. The new construction reallocates the tax dollars shifting some from existing value to the new value. As has been the trend, the City's tax capacity is estimated to decrease 7.73 percent for taxes payable in 2013 according to Wright County. Last year the decrease was 11.61 percent. According to the assessors, the residential values are moderating and beginning to 5ncrease. New value for taxes payable in 2014 will be higher than in 2013 due to the approximately 130 new single family homes and the commercial build -outs that occurred in 2012. General Fund Budget The 2013 General Fund budget maintains current service levels and programs consistent with 2012 with the exception of increased park and recreation programs. The budget is proposed to increase 3.97 percent of which $55,000 is offset by new recreation revenue making the effective increase 2.43 percent. A summary of General Fuad revenues and expenditures is attached. - Other Budgets The Building Safety Budget reflects an anticipated increase in building permits in 2013 resulting in revenue and building inspection cost increases. The Building Safety Fund is still in a deficit position; however, the increased building permit activity will help eliminate the deficit over time. Because of the deficit, the department is not currently being charged the full cost of operation. The water and Sewer Budgets were discussed at the November 26 workshop. The budgets include both capital and operating costs. The 2013 water and sewer rates gill be adopted at a future meeting. Conclusion The adoption of the final tax leery and budget follows much discussion and review byte Council and staff of City programs and services and the funding necessary to provide those services. After taking public input at this meeting, the Council may choose to amend the budget or tax -levy before final adoption, As i stated earlier, the final levy may not be increased above the amount approved in September. SUPPORTING DOCUMENTS: X ATTACHED Q NONE • Resolution 2012-84 Setting a Final Tax Levy of $4,377,910 for 2013 Budget Appropriations * General Fuad budget summary POSSIBLE MOTION MSEW ..... :.....:........n..:.....,.,....... ......_n-......n.-...........n.x.n.-.................... .................... ........-..... ......... .........n...........-......................_..._......-..........-..._..._.._..-.. --.-.....ry..:.-_.........-...-....:.-..:....... :.......:.............:..................... ........ ....... ........ .............. .......... ......... ..n.......n....-.......................... x................-._ P aa� a wo' d matron as rou rou rtik ft to appear In the minutes. 1. Motion to approve Resolution 2012-84 Setting a Finan Tax Levy of$4,377,910 for 2013 Budget Appropriations. 2. Motion to approve the 2013 budgets as presented. General Fuad $3,701,520 Building Safety 2 .0,668 Water 448,860 Sever 902,491 BUDGET INFORMATION FUNDING: BUD ETM NIA n YES N/A NO ACTION TAKEN APPROVED AS REQUESTED © DENIED n TABLED n OTHER (List changes) COMMENTS: RESOLUTION NO, 2012-84 OF OTSEGO COUNTY OF WRIGHT, MINNESOTA A RIBOL TI N SETTING A FINAL TAX LEVY OF $ 49371,910 FOR 2013 BUDGET APPROPIAT1 NS MERE S, the Otsego City Council is required by State lav to establish a final tax levy for 2013 by December 28, 2012. NOW9 THEREFORE, BE 1T RES LVED BY THE CITY COUNCIL OF OTSEGo, MINNESOTA, 1. That there is hereby approved for proposed expenditure fi•om general taxes the following suras for the purpose indicated. General Goverment $338789145 Storm Water $ 575765 Tax Abatement $ 173000 2003/2004/2006 Street hnproveme t Debt Service 275,000 Public Works Building Debt Service 150t000 Total Tax Levy S4377,91 2. That a copy of this resolution be transmitted to the Wright Counter Auditor. Dated this 1 OP' day of December, 2012 CITY OF OTSEGO Jessica Stockemp, Mayor ATTEST: Tauri Loft, City Clerk City of Otsego 2013 Proposed Budget General Fund Revenue Summary Amended Proposed 2011 2012 2013 Percent Dollar Description Actual Budget Budget Change Change.- dotes Taxes Property Tax $ 31346,519 $ 31108J65 31213,145 Subtotal 31346,519 31108,105 31213,145 3.38% $ 104,980 1 Licenses & Permits: Business Licenses Sign Permits Building Permits Septic Permits Subtotal Intergovernmental Aid: Police Aid MSA Maintenance Other State Aid Subtotal Charges and Fees: Administrative fees Assessment searches Maps/copies Grading Reviews Mining Fees Recreation Fees Subtotal Other Revenue: Fines & Forfeits Special Assessments Interest Earnings Donations Antenna Rental Rent Franchise Fees Other Subtotal 23,200 15,000 23,909 250 - - 75,09 - - 71000 - - 105,459 15,000 28,900 36,607% 13,909 46,692 47,900 47,900 147,633 145X0 909 1 4,900 11872 11872 '11875 190f197 193,872 202,875 4.64% 91903 11437 420 - .. 535 - 3177'0 - - 31199 10,000 2,000 - 21509 55,900 913'12 12,500 57,900 356-00% 44,500 11000 -- 19,993 30,000 - 1 1 3,130 1 00,000 100,000 31000 509 500 55,070 - 24,000 -. .. 100,175 100,000 1003000 134,439 - - 455,868 2302500 200,500 --13.02% 39,990 Notal Revenue $ 41113,340 $ 31560,037 317013520 3,97% $ 141,483 Notes: (1) 2012 budget is reduced by delinquent tax amount. Actual leery increase is $481230 or 1.53%. 12/6/2012 City of Otsego 2013 Proposed Budget General Fund Expenditure Summary Culture and Recreation Park Maintenance 233,155 2911655 25.09% 58,500 Recreation 67,500 137,110 163.13% 69,616 Heritage Preservation 11766 1,250 -26.47% (450) 302, 355 430,01 5 42.22% $ 127,660 Total General Fund 61560,037 3,701 2520 3.97% $ 141,483 12/6/2012 Amended Proposed 2012 2013 Percent Dollar Description Budget Budget Change Grange General Government City Council $ 633627 621956 -1.60 $ (677) Administration 381,110 365,29 4.15% (15,820) Elections 113600 585 -94.68% (10,415) Planning Commission as ion 800 1,666 110.00% 880 Assessing 70,606 66,250 -2.50% (1,756) Planning 861000 60,666 0.00% M Finance 2 o�2 5 243,945 1.52% 31666 1T 621000 36,850 15.16% 4,850 Legal 70,000 70,000 0.00 - Economic Development 121560 141460 15.20% 1,960 Facilities - Prairie Center 51,920 43,566 -16.22 (8,426) Facilities - City Hall PW - 76,665 781665 Facilities - Old Town Hall 11000 (1 1000) Subtotal 1161x4, 2{42 1,066)135 5.12 51,893 Public Safety Police Services 6721350 8831300 1.26 16,956 Police Commission 21710 11370 -49.45% 1 ,340) Fire 345,000 355,000 2.90% 10,000 Emergency Management 21500 60566 160.00% 41000 Animal Control 14,400 17,500 21.53% 31100 Subtotal 11236,960 1,263,670 2.16 $ 261710 Public Works Streets 784,480 510,240 -34.96% (274 246) Engineering 117,000 1171000 6.00% - Street Lighting 105,000 105,000 0.00% - Fleet Maintenance - 209,460 209,460 13006f480 9411700 -6.44% $ (64,760) Culture and Recreation Park Maintenance 233,155 2911655 25.09% 58,500 Recreation 67,500 137,110 163.13% 69,616 Heritage Preservation 11766 1,250 -26.47% (450) 302, 355 430,01 5 42.22% $ 127,660 Total General Fund 61560,037 3,701 2520 3.97% $ 141,483 12/6/2012