ITEM 2 Budget meeting #3ITEM 2
1
CITY OF
se o
MINNESOTA
TO: Mayor and City Council
FROM: Adam Flaherty, City Administrator & Finance Director
DATE: July 31, 2017
SUBJECT: Budget Meeting #3
On Monday, Council and staff will begin reviewing the draft 2018 General Fund budget, which was
distributed to the Council on July 24th. The draft budget is developed using a combination of
historical data and future projections based on anticipated operations for 2018. 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 up to the September
I lth regular meeting, where the Council will need to adopt the preliminary property tax levy, which
is the maximum amount the City can levy for taxes payable 2018.
I have developed an outline of discussion topics below.
Property Tag Levy
The Council and staff reviewed the debt service, tax abatements and capital reserve components of
the property tax levy at the June 12th budget meeting. Attached with the packet for this meeting, is
an updated summary. Staff will review and explain any changes that have occurred since the June
12th review. Staff would be seeking Council consensus at each meeting regarding the direction of
the preliminary property tax levy amount.
Confirm Assumptions
The draft budget document assumes a 2.50% o cost of living adjustment to the City's pay plan for
2018. This assumption was reviewed at previous budget meetings and the Council concurred on
June 26th to include this assumption for the budget review process.
City of Otsego 113400 90th Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-9163
ITEM 2
Fund Summary
The draft budget is being presented as a balanced budget, with both revenues and expenditures
totaling $5,227,751, which is a 3.70% increase from the prior year.
The unassigned fund balance from year-end 2016 is $3,342,821, or 64% of the draft general fund
budget for 2018. Analysis of year-to-date information for 2017 indicates that revenues will exceed
expenditures, and that an increase in fund balance is expected.
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 was briefly discussed at the June 12th budget meeting. The City Administrator / Finance
Director will bring this topic forward again at a future budget meeting.
Revenues
The primary source of revenue within the General fund is property tax dollars. An increase of
$69,000 (1.83%) in property tax levy is being proposed within the draft budget.
License and permit revenue is being increased $87,338 (11.08%) within the draft budget to account
for the building activity anticipated in 2018.
The remaining revenue source budgets are consistent with prior years.
Expenditures
Total expenditures within the draft budget increased $187,186 (3.70%) from the prior year budget.
Operations and expenditures of the General fund are broken down into five functions. The General
Government function budget decreased slightly due to personnel savings with the combination of
the City Administrator / Finance Director positions. The Public Safety function had the largest
increase, $114,210 (6%), and is spread among police services, fire protection and building
inspections. Each of the other three functions calculates increases between 5% and 6%, but with
more modest actual dollar increases.
Attached with the packet for this meeting is a proposed schedule to review each of the department
budgets over the course of the three scheduled budget review meetings.
Materials Attached for Discussion
1) Property Tax Levy Summary
2) Department Expenditure Review Schedule
City of Otsego 113400 90th Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-9163
City of Otsego
40 Property Tax Levy Calculations
Payable 2018
Revised: July 26, 2017 Preliminary (6-12-2017) Preliminary (7-31-2017)
Levy Description 2015 2016 2017 2018 Change Change 2018 Change_ Change
General Revenues 3,319,000 3,529,352 3,766,000 3,878,980 112,980 3.00% 3,835,000 69,000
Tax Abatements 23,000 88,814 81,385 65,546 (15,839) 19.46% 65,546 (15,839) 19.46%
Debt Service
Series 2010D & Series 2011A
Series 20108
Kadler Street Project
Sub -total
Capital Reserves
Pavement Management
Trails Management
Capital Equipment
Parks Equipment
Fire Department
Storm Water
Capital Improvements
Sub -total
Grand Total
Tax Capacity
Growth (%)
Tax Rate
200,000
225,000
225,000
215,000
(10,000)
215,000
(10,000)
410,000
415,000
430,000
440,000
10,000
440,000
10,000
-
-
-
53,710
53,710
60,462
60,462
610,000
640,000
655,000
708,710
53,710
8.209/ 715,462
60,462 9.23%
ichool District
39.266
36.659
36.659
0.00%
36.659
320,000
339,200
475,960
600,000
124,040
600,000
124,040
25,000
25,250
26,000
30,000
4,000
30,000
4,000
160,000
168,000
235,200
242,256
7,056
242,256
7,056
53,000
54,590
55,000
56,000
1,000
56,000
1,000
145,000
150,000
150,000
160,000
10,000
160,000
10,000
25,000
25,000
25,000
26,000
1,000
26,000
1,000
-
-
160,200
-
(160,200)
282,500
122,300
728,000
762,040
1,127,360
1,114,256
(13,104)
-1.16% 1,396,756
269,3961 23.90%
4,680,000
5,020,206
5,629,745
5,767,492
137,747
2.45% 6,012,764
383,019 6.80%
11,358,615 13,238,424 14,873,116 16,186,269 16,186,269
16.5S% 12.35% 8.83% 8.83%
FLOATING FLOATING
41.202 37.921 37.852 35.632 359,305 37.147 114,033
Taxing
2016
2017
2018
2018
2018
Median Residential Sale Price
Authority
Final Tax Rate
Final Tax Rate
Est. Tax Rate
Change
Est. Tax Rate
Change
=ity of Otsego
37.921
37.852
35.632
-5.86%
37.147
-1.86%
Nright County
39.970
39.599
39.599
0.00%
39.599
0.00%
ichool District
39.266
36.659
36.659
0.00%
36.659
0.00%
ichoolDistrict - RMV
19.441
19.373
19.373
0.00%
19.373
0.D0%
Description
2017
2018
Change
2018
Change
Median Residential Sale Price
295,000
295,000
0.00%
295,000
0.00%
Less: MV Exclusion
(10,690)
(10,690)
(10,690)
Taxable Market Value
284,310
284,310
0.00%
284,310
0.00%
Tax Capacity
2,843
2,843
2,843
2017
2018
2017
Taxing
Estimated
Estimated
Estimated
Authority
Tax
Tax
Change
Tax
Change
City of Otsego
1,076
1,013
-5.86%
1,056
-1.86%
Wright County
1,126
1,126
0.00%
1,126
0.00%
School District
1,042
1,042
0.DQ%
1,042
0.00%
School District - RMV
572
572
0.00%
572
0.00%
Total
3,816
3,753
-1.65%
3,796
-0.52%
Annual Increase
63
20
U:\Budget\2018\Property Taxes\Tax Levy Calculations
Comment
1% Calculation of EMV from County (4-24-17)
The City rate is calculated by the Finance
Director. County and School Districttax rates
are not updated from 2017.
According to Edina Realty, the Median Sale
Price for a residential home in Otsego currently
is $295K. Obtained 7/20/2017.
These are best estimates calculated bythe
Finance Director based upon information
available atthe time of presentation. These
should only be considered as estimates, and
should NOT be considered final.
7-31
July 31st
August 14th
Department Page Completed
Police Services 23
Public Safety Commission 24
Fire Protection 25
Emergency Management 28
Streets 30
Street Lights 35
Fleet Management 36
City Hall & Public Works Building 20
Old Township Site 22
Department
Page Completed
Revenues
City Council
City Ad m i n istrator
Administration
Elections
Assessing
Finance
Information Technology
Legal
Economic Development
Building Inspection
Animal Control
Recreation
3
5
7
9
11
12
13
15
17
45
26
29
U:1Budget12018\2018 Budget Calendar
August 28th
Department Page Completed
Prairie Center
18
Park Maintenance
38
Recreation
40
Heritage Preservation Commission
42
Planning Commission
43
Planning
44
Engineering
34