5.6. SR 06-13-2011~~j~j, ,,,~ MEMORANDUM
.11~ ~--.
R~i~er
TO: Mayor and City Council
FROM: Tim Simon, Finance Director
DATE: June 13th, 201 I
SUBJECT: 2012 Budget and Tax Levy Discussion
Item # 5.6.
City staff has started to work on developing a preliminary 2012 Budget. Budget meetings are
currently being held with all of the department heads or division managers and the
preliminary requested budgets are being compiled. At this worksession we will begin
discussing the 2012 tax levy and budget parameters. As you know, all of this leads up to the
Council adopting a maximum tax levy prior to September 15. The final budget will not be
adopted until December. The majority of the budgets will be discussed at meetings in July
and August.
Proposed Budget Timeline
• June 13 -Council worksession: General budget discussion on tax levy, Council
goals, staffing, pay and benefits, and other budget policy items
• July 11, August 8, and other dates to be determined: Presentation of proposed
budget to Council with department heads and division managers in attendance
• September 12 -Approve maximum tax levy
• October 10, November 14 -Continue budget and tax levy discussion
• December 5 -Present final proposed budget, take additional public input, adopt
final budget and tax levy
• October 10 & November 14 worksessions: 2012-2016 Capital Improvement Plan
• October 10 & November 14 worksessions: Enterprise Funds and other non-tax levy
budgets
Levy Limits
Levy limits have been in place for the 2009-2011 budgets and there is discussion that they
will be in place for the 2012 budget as well depending on the outcome of the Legislative
session. The chart below shows that as of the 2011 budget we have been significantly under
the amount allowable by levy limits.
N:\Public Bodies\City Council\Council RCA\Agenda Packet\06-13-2011\2012 budget 06132011.docx
Payable 2011 levy Limit $ 10,368,178
_ S eaal Levies = 1,333,855
_._._ _ _. __ _ P _ ._ _... _ .. _ __.__
Total Levy Limit (Pay 2011) $ 11,702,033
City Adopted 2011 Levy ; $ 11,112,391
__
Unused Levy $ 589,642
TaxTax Levy
Over the next several months as we work towaxds balancing the budget, the amount of tax
levy revenue will be a significant part of the process. At this point we should have some
general discussions about the tax levy since other revenues and the expenditures will be
presented at the next budget review to see where there is a gap. The chart below is a
summary of the 2011 tax levy and the other levies that will need to be levied in 2012.
'The 2011 levy and the 20121evy illustration fox all the funds assuming no change in the total
levy is shown below:
~....
General Fund
___...
Library
,Surface Water Man
Debt Service,,,,, _..._v.
,Economic Develops
2011
513
100
ment
nt Tax Abatement
50,000
813,525
427, 253
11,112,391
2012 Difference
9, 731, 786 ~
_ (26, 72T,
~
63,100 ~
-
50,000
839,001 ~ 25,476
428, 504 ' 1, 251
11,112, 391 -
As you can see above, the levies at this point remain somewhat consistent with the prior
year. You should note that in our long range planning the tax abatement levies will be
reduced significantly in 2013 as United Health tax abatement will have reached the
maximum amount.
Change in Net Tax Capacity
Last year the Net Tax Capacity (NTC) for the City decreased 2.91 %. In speaking with the
County, they estimate a decrease of 6% NTC for taxes payable 2012. This will change as
more accurate estimates will be available later in the year before the final levy is adopted.
For planning purposes I anticipate using the negative 6% as the starting point as we move
forward with the budget process.
Pav and Benefits
The last cost of living adjustment (COLA) employees received was 1.5% in January, 2009.
Step increases have been included in the budget. Council direction on COLA for the
preliminary budget would be helpful. The cafeteria contribution has been included at the
5% increase which has been consistent with the past two years. The health insurance rates
for 2011 were an increase of 1.7% over 2010. We won't know until the fall what the rate will
be for 2012, but the bid was capped at 13% for 2012. The health and dental insurance were
both bid in fall 2010.
N:\Public Bodies\City Council\Council RCA\Agenda Packet\OG-13-2011\2012 budget 06132011.docx
State Aid
Over the past several years State Aid has become a less reliable revenue source. Most State
estimates have the City receiving no LGA in 2012, and even if some did show up in the final
state budget, I anticipate taking the same approach of not including LGA in the General
Fund budget. We should revisit the capital outlay items that were removed from the budget
and set aside if we do receive any LGA. At this point, I would anticipate that we will not
receive any in 2011. Council did want a contingency plan for these items and the capital
outlay reserve was identified as a possible funding source. I have attached a list of the
$196,400 in capital outlay that was removed from the budget pending LGA.
Transfer In
Transfers are made each year to the general fund from the waste water, liquor, garbage,
EDA, and HR.A to cover costs associated with providing services to those funds. We will
again review the transfers to ensure they are covering those services. The exception is the
liquor fund transfer which is significantly higher to offset other operating expenditures. One
item to consider this year is using more of the capital outlay reserve as a transfer in to cover
general fund capital outlay.
Levels of Service
The preliminary budget will be drafted based on continuing the same level of service. The
unfilled positions and any new requests from staff will be presented at the next budget
meeting. We will continually review the list throughout the process to see if any should be
incorporated.
Estimated General Fund Revenues
There are several revenue sources that are still near historic lows but we do expect to see
some additional revenue for development related fees. A change approved last year was
increasing the amount of Municipal State Aid (MSA) that is allocated to maintenance. We
anticipate maintaining the same allocation for 2012, mainly for preventative maintenance
(seal coating). The allocation of the transfer from the electric utility is annually reviewed
with the amount going to the equipment replacement fund. Staff is currently updating the
10-year forecast on equipment replacement needs and once updated a recommendation for
the increase to the general fund will be determined.
Other Items
• Fuel price per gallon will start at $3.75 - we fully intend to use state contract pricing
again.
• Council Contingency - I anticipate starting with $75,000, the same amount as 2011.
• Public works building - I don't anticipate any tax levy in 2012 if we move forward
with phase II; a complete financing plan will be presented once the budget is further
defined.
• With the recently adopted action steps for 2011, you will be seeing some budget
requests from the departments as they work toward achieving the goals and action
steps over the next year.
N:\Public Bodies\Ciry Council\Council RCA\Agenda Packet\06-13-2011\2012 budget 06132011.docx
Council on Local Results and Innovation (State Auditor)
I have included in your packet a memo from the Office of the State Auditor on Local
Results and Innovation. 'This is a voluntary program for Counties and Cities to adopt a
standard set of ten performance measures that will measure residents' opinions of various
services. If the Council is interested, I did discuss this with the Economic Development
Manager and this could be incorporated into the community survey. In addition, we would
need to adopt the ten performance measures by July 1, 2011. We will discuss this in more
detail at the meeting.
Use of Fund Balance
Use of the fund balance is again an option to balance the budget in 2012. I anticipate
working on the preliminary budget without using fund balance, but as the process moves
forward we can determine its best use in the budget.
Staff will be prepared to discuss the items listed and any other items the Council would like
to discuss as we start the 2012 budget process on Monday. These discussions will help build
the parameters of the 2012 budget.
N:\Public Bodies\Ciry Council\Council RCA\Agenda Packet\06-13-2011\2012 budget 06132011.docx
2011 CAPITAL OUTLAY -Requested (General and
Requested
Special Revenue Funds)
Fundin Source
General Waste Liquor Department
Department Item Amount Fund Water Fund Fund Other Total
Human Resources TOP Software/implementation 4,450
Incode Kronos interface/maintenance 2,750
4,450
2,750
ire KRONOS software
Incode Personnel Management Systems
Confined Space Rescue Equipment
Thermal Imaging Camera
97,200 75,000
15 000
20,000
11 100 -
-
20,000
11 100 75,000
15,000
97,200
31,100 .31,100
Emergency Mgmt Siren 16,000 16,000
Outdoor Warning Siren Radio Board Upgrade 55,750 55,750
71,750 71,750
IT In Squad video upgrade 20,000 20,000
Laserfiche Upgrade 13,000 - 13,000
Virtualization payment 10,900 10,900
SQL Server upgrade 26,000 - 26,000
69,900 69,900
Mayor and Council Laptops/Computers 7 500 7,500 7,500
7500
Streets/Snow removal Bobcat lease 4,000 - 4,000
4,000 4,000
Senior Center Database management system 8,700 - 8,700
Replace carpeting 40 000 40,000
48, 700 48, 700
Subtotal General Fund Departments 330 150 133 750 - - _ 196,400 330,150
~` ""~"~' STATE OF MINNESOTA
--
~,~ , .~, ,
~;~ '~ ~ ~~'. OFFICE OF THE STATE AUDITOR
F SUITE 500
~"` ~ ~ 525 PARK STREET (651} 296-2551 (Voice)
REBECCA OTTO SAINT PAUL MN 55103-2139 (651.) 296-4755 (Fax)
state.auditor@state.mn.us (E-mail)
STATE AUDITOR 1-800-627-3529 (Relay Service)
June 1, 2011
Dear City Clerk/Finance Officer/County Auditor:
In 2010, the Legislature created the Council on Local Results and Innovation. In February
2011, the Council released a standard set of ten performance measures for counties and ten
performance measures for cities that will aid residents, taxpayers, and state and local elected
officials in determining the efficacy of counties and cities in providing services, and measure
residents' opinions of those services. By February of 2012, the Council must create
comprehensive performance measurement systems for cities and counties to implement in
2012. Cities and counties that choose to participate in the new standards measure program
----.
may be eligible for a reimbursement in LGA, and exemption from levy limits.
Participation in the standard measures program by a city or a county is'volunt Counties and
cities that choose to participate in the standard measures program must officially adopt the
correspondin 10 erformance benchmarks developed by the Council, and implement them in
2011. They will be required to communicate the resu is of t e measures to their residents the
following calendar year. A county or city that elects to participate in the standard measures
program for 2011 is eligible for a reimbursement of $0.14 per capita in local government aid, not
to exceed $25,000 and is also exempt from levy limits under sections 275.70 to 275.74 for taxes
payable in 2012, if levy limits are in effect.
In order to receive the per capita reimbursement in 2011, and levy limit exemption for
calendar year 2012, counties and cities must:
/ File a report with the Office of the State Auditor by July 1, 2011. This report will
consist of a declaration approved by the city council or county board stating that the
ci'ryfcounty has adopted the corresponding 10 perforrnaiice nieasur°es developed by the
Council.
Annual reporting will be required by the cities and counties that participate in the program. By
July 1, 2012, cities and counties will be required to report to the OSA that they have adopted
both the performance benchmarks, and the performance measure system released by the Council
in February of 2012. A declaration will be required that the city/county has reported or will
report the results for calendar 2011 of the 10 adopted measures to its residents before the end. of
calendar year 2012.
To meet the reporting requirements for 2011, a copy of the declaration in a PDF format can be
attached to an email and sent to gid@osa.state.mn.us. Beginning next year, the Office of the
State Auditor will be using the State Auditor's Form Entry System (SAFES) for the local
performance measurement and improvement program reporting.
An Equal Opportunity Employer
6.91 LOCAL PERFORMANCE MEASUREMENT AND REPORTING.
Subdivision 1.Reports of local performance measures.
(a) A county or city that elects to participate in the standard measures program must report its
results to its citizens annually through publication, direct mailing, posting on the jurisdiction's
Web site, or through a public hearing at which the budget and levy will be discussed and public
input allowed.
(b) Each year, jurisdictions participating in the local performance measurement and improvement
program must file a report with the state auditor by July 1, in a form prescribed by the auditor. All
reports must include a declaration that the jurisdiction has complied with, or will have complied
with by the end of the year, the requirement in paragraph (a). For jurisdictions participating in the
standard measures program, the report shall consist of the jurisdiction's results for the standard set
of performance measures under section 6.90. subdivision. 2, paragraph (a). In 2012, jurisdictions
participating in the comprehensive performance measurement program must submit a resolution
approved by its local. governing body indicating that it either has implemented or is in the process
of implementing a local performance measurement system that meets the minimum standards
specified by the council under section 6.90, subdivision 2, paragraph (b). In 2013 and thereafter,
jurisdictions participating in the comprehensive performa~rce measurement progratn~ mtist~submit a
statement approved by its local governing body affirming that it has implemented a local
performance measurement system that meets the minimum standards specified by the council
under section 6.90, subdivision 2, paragraph (b).
Subd. 2.Benefits of participation.
(a) A county or city that elects to participate in the standard measures program for 2011 is: (1)
eligible for per capita reimbursement of $0.14 per capita, but not to exceed $25,000 for any
government entity; and (2) exempt from levy limits under sections 275.70 to 275.74 for taxes
payable in 2012, if levy limits are in effect.
(b) Any county or city that elects to participate in the standard measures program for 2012 is
eligible for per capita reimbursement of $0.14 per capita, but not to exceed $25,000 for any
government entity. Any jurisdiction participating in the comprehensive performance measurement
program is exempt from levy limits under sections 275.70 to 275.74 for taxes payable in 2013 if
levy limits are in effect.
(c) Any county or city that elects to participate in the standard measures program for 2013 or any
year thereafter is eligible for per capita reimbursement of $0.14 per capita, but not to exceed
$25,000 for any government entity. Any jurisdiction participating in the comprehensive
performance measurement program for 2013 or any year thereafter is exempt from levy limits
under sections 27.70 to 275.74 for taxes payable in the following year, if levy limits are in
effect.
Subd. 3.Certification of participation.
(a) The state auditor shall certify to the commissioner of revenue by August 1 of each year the
counties and cities that are participating in the standard measures program and the comprehensive
performance measurement program.
(b) The commissioner of revenue shall make per capita aid payments under this section on the
second payment date specified in section 477A.015, in the same year that the measurements were
reported.
(c) The commissioner of revenue shall notify each county and city that is entitled to exemption
from levy limits by August 10 of each levy year.
:An Equal Opportunity Employer
Model Performance Measures for Cities
The following are the recommended model measures of performance outcomes for cities, with
alternatives provided in some cases. Key output measures are also suggested for consideration
by local city officials.
General•
1. Rating of the overall quality of services provided by your city (Citizen Survey:
excellent, good, fair, poor)
2. Percent change in the taxable property market value
3. Citizens' rating of the overall appearance of the city (Citizen Survey: excellent, good,
fair, poor)
Police Services:
4. Part I and II crime rates (Submit data as reported by the Minnesota Bureau of
Criminal Apprehension. Part I crimes include murder, rape, aggravated assault,
burglary, larceny, motor vehicle theft, and arson. Part II crimes include other
assaults, forgery/counterfeiting, embezzlement, stolen property, vandalism, weapons,
prostitution, other sex offenses, narcotics, gambling, family/children crime, D. U.L,
liquor laws, disorderly conduct, and other offenses.)
OR
Citizens' rating of safety in their community (Citizen Survey: very safe, somewhat
safe, neither safe nor unsafe, somewhat unsafe, very unsafe)
Output Measure:
Police response time (Time it takes on top priority calls from dispatch to the first
officer on scene.)
Fire Services•
5. Insurance industry rating of fire services (The Insurance Service Office (ISO) issues
ratings to Fire Departments throughout the country for the effectiveness of their fire
protection services and equipment to protect their community. The ISO rating is a
numerical grading system and is one of the primary elements used by the insurance
industry to develop premium rates for residential and commercial businesses. ISO
analyzes data using a Fire Suppression Rating Schedule (FSRS) and then assigns a
Public Protection Classification from 1 to 10. Class 1 generally represents superior
property fire protection and Class 10 indicates that the .area's fire suppression
program does not meet ISO's minimum criteria.)
OR
Citizens' rating of the quality of fire protection services (Citizen Survey: excellent,
good, fair, poor)
Output Measure:
Fire response time (Time it takes from dispatch to apparatus on scene for calls that
are dispatched as a possible fire).
Emergency Medical Services (EMS) response time (if applicable) (Time it takes from
dispatch to arrival of EMS)
Streets•
6. Average city street pavement condition rating (Provide average rating and the rating
system program/type. Example: 70 rating on the Pavement Condition Index (PCI))
OR
Citizens' rating of the road condition in their city (Citizen Survey.• good condition,
mostly good condition, many bad spots)
7. Citizens' rating the quality of snowplowing on city streets (Citizen Survey: excellent,
good, fair, poor)
Water:
8. Citizens' rating of the dependability and quality of city water supply (centrally-
provided system) (Citizen Survey: excellent, good, fair, poor)
Output Measure:
Operating cost per 1,000,000 gallons of water pumped/produced (centrally-provided
system) (Actual .operating expense for water utility / (total gallons
pumped/1, 000, 000))
Sanitary Sewer•
9. Citizens' rating of the dependability and quality of city sanitary sewer service
(centrally provided system) (Citizen Survey: excellent, good, fair, poor)
Output Measure:
Number of sewer blockages on city system per 100 connections (centrally provided
system) (Number of sewer blockages on city system reported by sewer utility /
(population/100))
Parks and Recreation:
10. Citizens' rating of the quality of city recreational programs and facilities (parks, trails,
park buildings) (Citizen Survey: excellent, good, fair, poor)