Loading...
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