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MINNESOTA
TO: Mayor and City Council
FROM: Adam Flaherty, City Administrator & Finance Director
DATE: October 9, 2017
SUBJECT: Budget Meeting #6
On Monday, Council and staff will begin the review of the 2018-2027 Capital Improvement Plan
and the 2018 Public Utility operating budgets.
I have developed an outline of discussion topics below.
Fleet Vehicles and Equipment
The City has established Fund #206 — Revolving Capital Equipment. The purpose of this fund is to
provide funds and to account for the expenditure of such funds for costs associated with the
replacement of capital equipment, most significantly the City's machinery and vehicle fleet.
City staff has prepared recommendations for 2018 purchases, which include both replacements of
and additions to the City's machinery and vehicle fleet. City staff has also prepared a projected
replacement plan through 2027, which covers the entire Capital Improvement Plan period.
City staff presented this information to the Public Works Sub -Committee on September 20th
It should be noted that inclusion of a certain item within the Capital Improvement Plan does not
commit final approval by the City Council. Rather, it directs City staff to plan towards and gather
necessary information for an educated final approval on each respective item. Each individual item
is planned, researched and brought back to the City Council for final approval when the respective
purchase is ready to move forward.
Materials for Review and Discussion
1) Summary for 2018-2027
2) Details of 2018 Purchases
a. Vehicle Ratings
3) Financial Cash Flow — Fund #206
City of Otsego 113400 90" Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-9163
Fund Balance Policy — Calculation of Transfer
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.
The Office of the State Auditor recommends that, at year-end, local governments that rely
significantly on property taxes maintain an unrestricted fund balance of approximately 35-50
percent in their General and special revenue funds.
City staff will review some recommendations, and is ultimately seeking direction from the City
Council on how they would like to proceed.
Materials for Review and Discussion
1) Calculations of Transfer
General Fund
There currently are no proposed changes to the General fund budget that was used to develop the
2018 preliminary property tax levy. In the event there are proposed changes, City staff will review
those with the City Council at one of the meeting dates below. The City Council will adopt the Final
2018 General Fund Budget in December.
Property Tax Lew
There currently are no proposed changes to the 2018 property tax levy. In the event there are
proposed changes, City staff will review those with the City Council at one of the meeting dates
below. The City Council will adopt the Final 2018 Property Tax Levy in December.
Next Meetings
At the September 11th City Council meeting, the Council made a motion to schedule special City
Council meetings to review the 2018-2027 Capital Improvement Plan and the 2018 Public Utility
operating budgets. The schedule for these meetings is as follows:
1) October 23rd — Public Utility Operating Budgets & CIP
2) November 13th — Pavement Management CIP
3) November 27th — Various CIP (Administration, IT, Parks & Trails, Buildings, etc.)
Each of the meetings above is scheduled to immediately follow the regular City Council meetings
on each respective date.
City of Otsego 113400 90" Street NE, Otsego, MN 553301 Tel. (763) 441-4414 Fax (763) 441-9163