ITEM 1Y
OtCITY QP
a
MINNESOTA
TO: Mayor and City Council
FROM: Adam Flaherty, City Administrator & Finance Director
DATE: August 28, 2017
SUBJECT: Budget Meeting #5
On Monday, Council and staff will resume the review of the draft 2018 General Fund budget. This
meeting is the 3rd and final of three special meetings scheduled for budget and tax levy review.
I have developed an outline of discussion topics below.
Property Tax Lew
The 2018 property tax levy currently totals $6,106,302, which is an increase of $476,557 (8.46%)
from the prior year. The best available estimate for the tax rate is 37.725, which is a decrease of
0.127 (<1%) from the payable 2017 tax rate of 37.852.
Since the August 14th budget meeting, the tax levy has increased $70,000 to account for additional
budget expenditures in the General Fund. I will review the specifics in more detail within the
Expenditures section of this memorandum.
General Fund Summary
The draft budget is being presented as a balanced budget, with both revenues and expenditures
totaling $5,381,021, which is a 6.75% increase from the prior year.
Revenues
The only changes to line items within the revenue budget were with the property tax levy and
respective uncollectible amounts. These respective changes were made to continue the presentation
of a balanced budget.
City of Otsego 113400 90" Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-9163
Expenditures
Total expenditures have increased $69,570 since the August 14th budget meeting:
Police Services (101-42100-390): Representatives from the Wright County Sheriff's office
were present at the August 14th budget meeting. During that meeting, the recommendation
was communicated that service hours should be increased to 48 hours daily by the end of
2018. An amount of $105,120 has been added to the budget to account for that
recommendation. This increase is a phased plan, where the City will pay for an increase of 4
service hours the entire year; however, actual implementation will not occur until July 1St
This implementation plan allows the "banking" of the hours from January -June, and the
usage of those "banked" hours from July -December.
Building Inspections (101-42410-390): At the August 14th budget meeting, the assumption
was used that an increase in contracted rates from $50.00 to $75.00 (per hour) would be
implemented on January 1, 2018. City staff has had further discussions with Metro West,
and negotiated for a phased increase. The new assumptions account for a rate of $62.50
beginning in 2018, with the fully phased increase of $75.00 beginning in 2020. The owner
of Metro West is planning to be present for Monday's meeting, and will be able to review
this request with the City Council and answer any questions you may have. This change in
assumptions has decreased the budget by $35,550.
Next Steps
At the September 11th City Council meeting, the Council will need to adopt the preliminary
property tax levy, which is the maximum amount the City can levy for taxes payable 2018.
It should be noted that the preliminary property tax levy is the amount used for truth -in -taxation
notices that are sent to the taxpayers by Wright County. This of course does not set the amount of
taxes that the taxpayers will pay; rather, it provides a point -in -time estimate of taxes payable in
2018.
The final budget and property tax levy will not be adopted by the City Council until December.
Changes to the budget can still be made between now and then, but increases to expenditures
become difficult because the primary revenue source to pay for those increases is property taxes.
The property tax levy can be decreased between now and then, but the levy cannot be increased.
Staff is seeking direction from the City Council on how they would like to proceed.
Materials Attached for Discussion
1) Property Tax Levy Summary
2) Outline of Expenditure Budget Changes
3) Revised General Fund Budget Summary
4) Revised General Fund Expenditure Summary — By Department
5) Department Expenditure Review Schedule
City of Otsego 113400 90" Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-9163
City of Otsego
isProperty Tax Levy Calculations
Payable 2018
Revised: August 23, 2017 Preliminary (8-14-2017) Preliminary (8-28-2017)
Levy Description 2015 2016 2017 2018 Change Change 2018 Change Change
General Revenues 3,319,000 3,529,352 3,766,000 3,919,000 153,000 4.06% 3,989,000 223,000
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
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
Comment
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
610,000
640,000
655,000
655,000
-1.48%
0.00%1 655,000
- 10.00%
Nright County
39.970
39.599
39.599
0.00%
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
282,500
122,300
282,500
122,300
728,000
762,040
1,127,360
1,396,756
269,396
23.902j. 1,396,756
269,396 23.90%
270
4,680,000
5,020,206
5,629,745
6,036,302
406,557
7.227 6,106,302
476,557
11,358,615
13,238,424
14,873,116
16,186,269
16,186,269
1% Calculation of EMV from County (4-24-17)
16.55%
12.35%
8.83%
8.83%
FLOATING FLOATING
41.202 37.921 37.852 37.293 90,495 37.725 20,495
Taxing
2016
2017
2018
2018
2018
Median Appraised Value
Authority
Final Tax Rate
Final Tax Rate
Est. Tax Rate
Change
Est. Tax Rate
Change
:ity of Otsego
37.921
37.852
37.293
-1.48%
37.725
-0.33%
Nright County
39.970
39.599
39.599
0.00%
39.599
0.00%
school District
39.266
36.659
36.659
0.00%
36.659
0.00%
school District - RMV
19.441
19.373
19.373
0.00%
19.373
0.00%
Description
2017
2018
Change
2018
Change
Median Appraised Value
198,300
217,206
9.53%
217,206
9.53%
Less: MV Exclusion
(19,393)
(17,691)
(17,691)
Taxable Market Value
178,907
199,515
11.52%
199,515
11.52%
Tax Capacity
1,789
1,995
1,995
2017
2018
2017
Taxing
Estimated
Estimated
Estimated
Authority
Tax
Tax
Change
Tax
Change
City of Otsego
677
744
9.90%
753
11.239/.
Wright County
708
790
11.58%
790
11.58%
School District
656
731
11.43%
731
11.43%
School District - RMV
384
421
9.64%
421
9.64%
Total
2,425
2,686
10.76%
2,695
11.13%
Annual Increase
261
270
U:\Budget\2018\Property Taxes\Tax Levy Calculations
The City rate is calculated by the Finance
Director. County and School District tax rates
are not updated from 2017.
Source = Wright County Assessor
These are best estimates calculated by the
Finance Director based upon information
available at the time of presentation. These
should only be considered as estimates, and
should NOT be considered final.
8-28
City of Otsego
General Fund Budget - 2018
Changes to Draft Budget
Total Expenditures - Draft Budget Binder (July 24th) $ 5,227,751
Prairie Center
Fire Alarm System - Testing & Inspection Maintenance 400
City Hall / Public Works Building
Fire Alarm System - Testing & Inspection Maintenance 600
Police Services
Increase Contract from 40 to 44 Hours Daily 105,120
Building Inspections
Increase Contract Rate from $50 to $62.50 37,650
Street Lights
Add Electricity Costs from Above Standard District 10,000
Economic Development
Decrease of Memberships & Dues (500)
Total Expenditures - Draft Budget (August 28th)
U:\Budget\2018\General Fund\V2.0 - 2018 PRELIM BUDGETS INPUT
5,381,021
City of Otsego
General Fund Budget - 2018
Requested Budget
Revenue & Expenditure Summary
Description
Revenues
Taxes
Cable Franchise Fees
Licenses & Permits
Intergovernmental
Charges for Services
Special Assessments
Fines & Forfeitures
Investment Interest
Miscellaneous
Interfund Transfers
Subtotal
Expenditures
General Government
Public Safety
Public Works
Culture & Recreation
Economic Development
Interfund Transfers
Subtotal
Net Change in Fund Balance
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
Original Revised
Requested Requested
Actual Actual Year -to -Date Budget Budget Budget
2015 2016 2017 2017 2018 2018
$ 3,315,453 $
3,494,664 $
2,018,224 $
3,763,273 $
3,831,298 $
3,984,568
128,722
131,229
67,107
132,000
136,000
136,000
1,179,136
1,661,565
774,502
788,900
876,238
876,238
195,363
69,567
3,436
56,800
58,800
58,800
174,659
286,577
239,338
105,550
111,575
111,575
3,540
4,179
4,117
-
-
-
11,998
16,223
8,422
6,000
12,000
12,000
14,410
20,221
200,940
33,000
42,000
42,000
39,251
43,508
7,801
-
-
-
122,276
136,755
-
155,042
159,840
159,840
5,184,807
5,864,487
3,323,889
5,040,565
5,227,751
5,381,021
1,150,132
1,240,002
729,434
1,334,349
1,311,109
1,312,109
1,666,511
1,829,288
1,266,207
1,875,138
1,989,348
2,132,118
1,034,525
1,010,623
696,399
1,136,728
1,194,281
1,204,281
477,444
534,123
362,010
584,490
616,653
616,653
96,211
98,326
65,476
109,860
116,360
115,860
1,289,914
460,212
-
-
-
-
5,714,737
5,172,573
3,119,526
5,040,565
5,227,751
5,381,021
$ (529,930) $
691,914 $
204,363 $
(0) $
- $
(1)
� Revenues � Expenditures -Ar --Fund Balance
3,453,794
2018
Budget
City of Otsego
General Fund Budget - 2018
,0
Expenditures by Function Summary
Requested Amounts
Function & Department
General Government
41100
City Council
41320
City Administrator
41400
Administration
41410
Elections
41550
Assessing
41600
Finance
41650
Information Technology
41700
Legal
41940
Prairie Center
41945
City Hall & Public Works Building
41950
Old Township Site
24,000
Subtotal
Public Safety
80,589
42100
Police Services
42150
Public Safety Commission
42200
Fire Protection
42410
Building Inspection
42500
Emergency Management
42710
Animal Control
94,500
Subtotal
Original Revised
Requested Requested
Actual Actual Year -to -Date Budget Budget Budget
2015 2016 2017 2017 2018 2018
$ 58,713 $
76,631 $
68,782 $
122,293 $
142,921 $
142,921
-
-
89,166
160,746
159,028
159,028
379,882
434,854
187,120
296,418
323,572
323,572
1,003
20,016
2,161
1,924
24,000
24,000
70,537
76,623
80,589
81,623
94,111
94,111
341,965
306,725
126,908
318,400
202,637
202,637
71,523
85,651
41,618
94,500
97,080
97,080
123,239
107,499
52,297
114,000
111,600
111,600
21,980
29,120
19,799
32,149
37,927
38,327
80,594
101,009
59,060
109,656
114,633
115,233
695
1,874
1,934
2,640
3,600
3,600
1,150,132
1,240,002
729,434
1,334,349
1,311,109
1,312,109
952,546
991,403
684,239
1,020,700
1,063,200
1,168,320
137
729
148
2,850
3,060
3,060
455,367
494,831
402,492
539,094
573,917
573,917
244,122
322,334
162,389
287,174
331,671
369,321
2,878
7,891
9,135
10,920
3,100
3,100
11,460
12,101
7,803
14,400
14,400
14,400
1,666,511
1,829,288
1,266,207
1,875,138
1,989,348
2,132,118
Public Works
43100
Streets
630,107
641,194
468,235
720,326
751,662
751,662
43150
Engineering
122,074
74,258
43,874
86,400
91,350
91,350
43160
Street Lights
108,987
121,163
68,369
117,000
132,400
142,400
43240
Fleet Management
173,358
174,008
115,921
213,002
218,869
218,869
Subtotal
1,034,525
1,010,623
696,399
1,136,728
1,194,281
1,204,281
Culture & Recreation
45200
Park Maintenance
326,850
350,949
251,221
390,811
410,207
410,207
45250
Recreation
148,993
181,900
110,531
191,229
203,966
203,966
45300
Heritage Preservation Commission
1,601
1,273
258
2,450
2,480
2,480
Subtotal
477,444
534,123
362,010
584,490
616,653
616,653
Economic Development
46530
Planning Commission
1,724
2,440
-
4,000
4,000
4,000
46570
Planning
86,335
87,218
62,076
91,200
97,200
97,200
46580
Economic Development
8,152
8,667
3,400
14,660
15,160
14,660
Subtotal
96,211
98,326
65,476
109,860
116,360
115,860
Interfund Transfers
49300
Interfund Transfers
1,289,914
460,212
-
-
-
Subtotal
1,289,914
460,212
Grand Total $ 5,714,737 $ 5,172,573 $ 3,119,526 $ 5,040,565 $ 5,227,751 $ 5,381,021
Change ($) $ 340,456
Change (%) 6.75%
July 31st August 14th August 28th
Department Page Completed Department Page Completed Department Page Completed
Revenues
City Council
City Administrator
Administration
Elections
Assessing
Finance
Information Technology
Legal
Economic Development
Building Inspection
Animal Control
U:\Budget\2018\2018 Budget Calendar
3
Yes
Police Services
Public Safety Commission
Fire Protection
Emergency Management
Streets
Street Lights
Fleet Management
City Hall & Public Works Building
Old Township Site
23
24
25
28
30
35
36
20
22
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Prairie Center
Park Maintenance
Recreation
Heritage Preservation Commission
Planning Commission
Planning
Engineering
Second Review
Police Services
Building Inspection
18
38
40
42
43
44
34
23
26
5 Yes
7 Yes
9 Yes
11 Yes
12 Yes
13 Yes
15 Yes
17 Yes
45 Yes
26 Yes
29 Yes