Loading...
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