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9.1. SR 09-06-2011ITENt 9.1. MEMORAiNDUM Elk TO: Mayor and City Council FROM: Tim Simon, Finance Director DATE: September 6, 201 I SUBJECT: 2012 Budget Discussion The City is required to certify its maximum City tax levy and the HR.A and EDA tax levies to the County Auditor no later than September 15, 2011. The levy adopted in September may be reduced on December 5, 2011, when the final levy is adopted, but it may not be increased. The levy adopted on September 12, 2011 will be used in the tax notices mailed to property owners in November. In addition, the Council must also schedule one regular meeting at which the budget and levy will be discussed and public comment will be taken. This meeting date, scheduled fox December 5, 2011, must also be set by September 15, 2011. Budget review updates The complete general fund including revenues has been reviewed with City Council as well as Pinewood, Ice Arena, Library, Storm Water, and Equipment Replacement Fund. In addition, personnel requests and capital outlay have also been reviewed. The remaining budgets are the enterprise funds that are not tax levy supported (Sanitary Sewer, Liquor, and Garbage). These budgets will be presented in October and November along with the complete capital improvement plan (2012-2016). Net tax capacity (NTC) and market value homestead exclusion program The County has indicated that they do not have an update on the net tax capacity for the City at this tune. We are hopeful that they will have an update by our adoption of the maximum levy on September 12, 2011. The reason for the delay is that the County is working on this new market value exclusion program for homestead properties with property values under $413,800. As you recall, this will shift the burden away from homesteads to other properties. Since we will no longer have the market value homestead credit with the new law, we could reduce our negative $300,000 (anticipated loss of MV credit) to zero and lower the tax levy to offset some of the shift to all property tax owners with the new exclusion program. We anticipate that not only will we have a change in values for 2012, but this market value exclusion program will reduce ourNTC also. The $300,000 offset will be a starting point and as we get the final information from the County we can see the full impact of the market value exclusion. We will discuss in further detail at the meeting. N:\PubGc Bodies\Ciry Counci]\Finance\Tim\20] 1\budgetmemo0906.docx 2012 General Fund Budget Update As you can see on the budget summary in scenario number 3, assuming NTC of negative 6 percent and the same overall tax levy of $11,112,391, there is currently a General Fund budget gap of $188,054 before any use of fund balance and other revenue/expenditure adjustments. At this point, the 2012 general fund expenditures is set to increase .7% from 2011. The Council should have some discussion of where they would like to see the maximum levy for the next meeting. Over the next several months we will make final adjustments to the budget for adoption in December. We will spend some time tonight reviewing personnel requests, cost of living adjustments, capital outlay and an overall discussion on the 2012 general fund. At our last meeting we reviewed the 2012-2016 equipment replacement fund budget. With the amount needed to fund capital equipment, I am able to adjust the ERMU (payment in lieu of tax) from $400,000 to $500,000 in the general fund. This adjustment has been made along with reducing Council contingency from $75,000 to $50,000 in the updated budget summary. Again, without the County information on NTC including this new market value exclusion we want to allow room for adjustments once this data is available. I am creating a new tax calculator for this market value exclusion and will put on the overhead if the Council is interested in looking at home value impacts. Next Stens Adopt the maximum City tax levy, HRA and EDA tax levies, and set a budget meeting for public comment on December 5, 2011. Complete General Fund detail budget will be provided on September 12, 2011. Attachments • League of Minnesota Cities slides - 2012 MVHC • Minnesota Department of Revenue -Anew homestead market value exclusion • 2012 Capital Outlay breakout -requested • 2012 Position requests/unfilled spreadsheet • 2012 Budget Summary • 2011 Sample levy for taxes payable 2012 • Inspection management plan memo. N:\Public Bodies\Ciry Council\Finance\Tim\2011\budgetmemo0906.docx ~""' ~i~is~~ W MVM I~i~ Or ~- Qa ~ca ~; N ~ ~ ~ ~ ~ ~ (7 sn c~rr x W ~ ~ _ JJCJ N ~~ ~~ra ~ ( ~ ~ ~ ~ ~ ~d ;~~ ~c ~ ~' y- a ~ ~ 'v W m ~ N Y Cq~ r/-. 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Cll can ~ Q ~ ~~ ~ ~ ~~ ~ ~ -~ fiir.. ~~ '~'/ ^ ^..® ~/ ...r. ~rwr^ rn~~ fir/ ^ ~~w /~ i a ~ ~ ~ ~ ~~ . "~ N~ ~ W .. ~ „~..~ ~= `i•1 S.: s= ~~ ~~~ ... „ .~sSS. ~-+ tC~ _~~ .'~w° r/'.~ ^~ ^ ~r W ^~/ ^~ `W V/ ~ M ti~ ._ t~ M / 3 ~~ .® N J J Q .}./ .~.... ~~ ~~ ~u s "~~y n/~ ~/ ~~ 4a 4~ ai N`x' tQ ^~ L s~ ^- ~{ c~ ~~ _~ .... .... -- L L `.. '~wi/ t=5 O ^~ ~'Wy ~rrr ^~ ~~ "'~ MINNESOTA• REVENUE 2011 Law Change: A New Homestead Market Value Exclusion replaces the Homestead Market Value Credit The 2011 Legislature repealed the homestead residential Market Value Credit (the agricultural credit did not change), and enacted a similarly designed homestead Market Value Exclusion. This change is effective for taxes payable in 2012. The following synopsis is intended to help local governments understand this law change. Expiring law: The Homestead Residential Market Value Credit • Homesteads received a credit on their tax statements reducing their gross tax. • As shown in the chart below, the credit equaled 0.4% of the first $76,000 in market value. It was reduced by 0.09% of the market value over $76,000 until it hit $0 at $413,800 of market value. $350 $304 at $76,000 _ _ ._.___ ~ ~_ ___..._.......~. __~..~........_ $300 ----~.__ _ __~~____ ~~" $250 $200 ` "" ~° $150 v $100 $50 . __..._ ~ _~..~._..~....~_.___ __..._ _~.___.~._.......... ~.~_____....__ _~ _~.....~~_ _..._$413 800 $- a1~ 'sue '~~ 1 0 ~ 1~ Op OO OO O '`~.j ~ ~j s~ `90 ~cP OO 00 .00 O O O 'J`am ~ J"~ ~iP Q ~6' Q Q~ ~O ~cP 00 00 00 00 00 O O O O O Market Value • The state reimbursed local governments for the sum of the market value credits granted to individual taxpayers on tax statements. As a result, some of the local governments' levy came from the state as credit reimbursement payments, and some from property tax payments. • When the state cut its reimbursement payments, local governments had to budget for a gap between their levy and what they received. Local governments may have levied more, cut some spending or both. New Law: The Homestead Market Value Exclusion • A portion of homestead market value will be excluded from taxation. • As shown in the chart on the next page, the exclusion equals 40% of the first $76,000 in market value. It is reduced by 9% of the market value over $76,000 until it hits $0 at $413,800 of market value. $35,000 $30,000 $25,000 c .° $20,000 3 x $15,000 W $10,000 $5,000 $- .,~ ~ ~ r r ~ ~ ~ „~ ~ ~ p A ~~ ~O ~tfl ~6` ~ t~-~ ~O ~d~ OO OO ~Op X00 X00 X00 X00 X00 X00 X00 JOO O O O O O O O O O Market Value • The state will no longer pay a share of the tax on homesteads, but homesteads have less value subject to taxation. • The removal of the state spending on credits means property taxpayers, as a whole, will pay more if levies remain the same. • The reduction in the tax base for homesteads means non-homesteads will pay a higher share of the levy, and a large share of homesteads could pay more given that exclusion amounts and other factors vary. • Local governments will receive the full amount that they levy from their taxpayers. How do credits and exclusions affect tax calculations? The prior law credit was deducted from a gross tax while the exclusion will reduce the taxable value. Changing taxable value means outcomes won't be identical. Old Law: New Law: The Credit The Exclusion Estimated Market Value $116,000 $116,000 Exclusions $0 $26,800 Taxable Market Value $116,000 $89,200 Class Rate 1% 1% Net Tax Capacity $1,160 $892 Tax Rate* 105.810% 110.920% Gross Tax $1,227 $989 Credit $Z6$ $0 Net Tax $959 $989 *The tax rate change used here reflects estimated average statewide rates for 2011 under either approach, assuming no changes in levies. Levy decisions and local tax base dynamics will affect the change in rates. How might the change impact local government levies and budgeting and property taxes? There are three key considerations: Local governments will receive the full amount they levy from their taxpayers. Local governments do not need to plan for further state reimbursement cuts -because there is no longer a payment to cut. Local governments should recognize that removing $292 million of credits from the system, and changing the composition of the tax base, will create large tax increases for some properties. This may increase sensitivity by taxpayers to levy decisions. Example: Budgeting and Tax Shift Scenario Context for Taxes Payable in 2011. In August 2010, "City A" was planning fora 2011 levy of $2,000,000. Approximately $1,900,000 was going to be paid by taxpayers and $100,000 by the state in the form of Market Value Credit reimbursements. Local officials then learned the city would have a $50,000 cut to its MVC Reimbursements, which meant the city would only receive $1,950,000 of a $2 million levy. City A decided to levy $2,040,000 for 2011. Officials anticipated they would make up almost $40,000 of the $50,000 cut with the levy increase, and cut their planned spending by $10,000. City A expected the levy of $2,040,000 would bring in approximately $1,990,000 (with $1,940,000 from taxpayers and $50,000 from the state). Decisions for Taxes Payable in 2012. Because there is no longer a credit, and thus no longer a portion of the levy coming from the state, the full levy will come from taxpayers. As a starting point, eliminating the credit for 2012 means city officials will have three general approaches: • Constant Levy: If City A keeps its levy constant at $2,040,000, taxpayers are actually asked to pay $100,000 more than the $1,940,000 they paid in 2011 (a 5.2% increase). • Constant Taxes: Levying $1,940,000, keeps the total coming from taxpayers the same (a 0% increase), but the city loses $50,000 in revenue. • Constant Revenue: Levying $1,990,000 keeps the amount of revenue constant, but the city is asking taxpayers to pay $50,000 more (a 2.6% increase). Example Assumptions To give some perspective of the tax shifts that might enter into this decision, assume the following net tax capacity (NTC) tax base information: .Taxes Payable 2011 Taxes Payable 2012 Total NTC tax base $6,700,000 $6,366,384 Non-Homestead NTC $3,000,000 $3,000,000 Homestead NTC $3,700,000 $3,366,384 620 homes at $70,000 MV $434,000 $260,400 644 homes at $150,000 MV $966,000 $813,114 575 homes at $400,000 MV $2,300,000 $2,292,870 Also assume that the city rate is 30% of the total tax rate (for allocating the credits for 2011). Tax Shifts Under Various Options. The following chart summarizes the levy options listed above. It identifies the total size of the levy and the shares paid homesteads and non- homesteads (and the paid and unpaid state shares for the 2011 baseline). Under all of the options, even where taxpayers pay the same total amount of taxes, there will be tax increases for non-homestead properties and some homestead properties. 2,500,000 Sample levy Options vs. 2011 Baseline __ $2,040,000 $2,040,000 $1,940,000 $1,990,000 Total Levy 2,000,000 ~'Q QQA _ _ ; _ ~ ., r 4= _ State-unpaid ~~ -;. ~ ,, credit 1,500,000 ...; X1.3; v , ~El':, _ _. :_ ,.~. __ State-paid T ~" s f ~ >~ credit s,ooo,ooo ~' ' Non- Homestead 500,000 _ -1,026,040 1,079,000 1.026,000 _.... ...._.1,052,00(1-- - Taxes .:Homestead ', - ---- r~---- _-------- , ------r- ----- ---- Taxes --~~ 2011 Baseline Constant Levy Constant Taxes Constant Revenue The tax shifts of the three alternatives can also be summarized as follows: 2011 Constant Levy Constant Taxes Constant Revenue Total Levy $2,040,000 $2,040,000 $1,940,000 $1,990,000 Total Revenues (% chg) $1,990,000 $2,040,000 (2.5%) $1,940,000 (-2.5%) $1,990,000 (0%) City Tax Rate 30.448% 32.043% 30.473% 31.258% Average Tax (% change) $70,000 home $129.14 $134.58 (4.2%) $127.98 (-0.9%) $131.28 (1.7%) $150,000 home $385.50 $404.58 (4.9%) $384.73 (-0.2%) $394.67 (2.4%) $400,000 home $1,214.20 $1,277.77 (5.2%) $1,215.08 (0.1%) $1,246.45 (2.7%) Non-Homestead Tax Change 5.2% 0.1% 2.7% A Final Note. This example illustrates tax shifts due to the conversion from credits to the exclusion in isolation from other discussions that might affect property taxes. Aid reductions and service demands will also be a significant factor in the local budgeting calculus. These other changes will also affect a property's tax calculation. 2012 CAPITAL OUTLAY -Requested Funding Source Requested General Waste Liquor Depanmant Department Item Amount Fund Water Fund Fund Other Totel Human Resources Tyler Output Processing TOP) 4,700 4,700 4,700 4,700 Emergency Mgmt Siren/radio board upgrades 69 000 69,000 69,000 69,000 Virtualization Project (Disaster Recovery) 10 900 10 900 10,900 10,800 Planning Mining area study 50 000 50 000 50,000 50,000 Streets/Snow removal GPS salter controllers 20,000 20,000 20,000 20,000 Senior Center Database management system 7,500 7,500 Replace air conditioning units 10 000 10 000 17,500 17,500 Subtotal General Fund Departments 172,100 172,100 - - 172,100 Ice Arena Floor scrubber Battery for Zamboni 9,500 11 000 9,500 11,000 20,500 20,500 WWTP Replace rock around tanks & bldgs. with asphalt 15,000 15,000 Phosphorus Monitor 55,000 55,000 Chemical feed pumps 10,000 10,000 River Line abandonment 200,000 200,000 Slip 8" Sanitary Sewer Main 70 000 70,000 _ ^' 350,000 350,000 Liquor Stores HVAC 15,000 15,000 Walk-in cooler doors 25,000 25,000 Walk-in cooler refrigeration 15 000 _ __ 15,000 55,000 55,000 Total $597,600 $172,100 $0 __ $0 $425,500 $597,600 Note: Vehicle and equipment replacement for non-enterprise funds will be reviewed with the 2012-2016 equipment replacement fund. m m d E E 0 0 °m °m E Q a a m m°' ~ ' ~j (0 m v ID a 0 co p m p M M R C M ~ ~ C m V c {app fD !O O_ r N M O. O V ~~pO p0 J V f00n ~ ^ N M M < h ~ v mm m ~ ~ ,A ~ w N C m J _ O j U C Q o ~ n ~ ~ a m r a c 8 ~ - a E c o S _ o c 3 ~ m ~ ~ F 3 d a o ~ a° a «5 ~ O ~ N m~ ~ ~pp N N ~ N O U 0 0 ~ p m ~ O A r O) m ~a o c ~ a~ O N N > C ~V m m~ om m ~ Eo i a ~ >E m y~p o c~°mmro ~m ~n m~~ ~ ~° 3~ ~ !~Om ~ NN m r` s~ _ 0 m U m o o+ $ c o m ~~ L~ $ m o O a~ n € €~c m N mo N ~ ~ j c`Qt y N E p O O m C C c 10 oo o t'bm a >7 r 2? com ~OFN3~C'y '?N~ N U ~ p NN N N H~OIa ~JO O. ~.N yam N N m N C In U V C $? po U ~ m ~ O ~ ~ ~ ~ U N N t0 V d ~111 n} ~~ Q O `t5 9 ~+ t-$ O '~O .~ ~ -.0 01 V m V Q F- a 0 V 0 . ~Q C CQQQ O O N E C b! pp ( ~rN ~ °' 0 ~ f p ~~pO ~.M- W {Np tOD OMD NtD ~ 1010 CO MGD (7 ' M ' O ~ OD N NO W LD OD 1 M 0 1 c )0 O ~ OOOtV 01~ UJ GDN f0 t0 OI t0 1~ f p W GDO 0 aD 00 Oi tOON O(O O N N(0 f0 N ~ 00 ' ~ F Z ~ ` ~ Q t9 ~ N 0 f O M t D O (n N m 0 p ~ ~p G p M OD 0 n (O o f O N N { { pp d M C M ~ M h C (~ W N ~ ~ m ~ W ~ N ~ r N ~ NN O N~ ~ M m M f D 9 (V (V 10 tV ~ ~ F- a ~ Q ,~ ~ U _ pp Q ~ It10O1! OnDn W NM C ~ ~0~p ~p ~ W x0001 OGOD W ~tNO ~~~ppO OMDM t0 M MiO Mf0 (h~M S O O ~ Ntr~l O 0100 yl OM W MI~ N '"~ 10 D C)M MI 000 0001 fD 010 Of tD O r O c 0 0 00 m p aD Nt0 fD 0 '~1 0 tp N fOONfO fO N ~ ~ ~ ~ U '" 1 am 'A N N N N N N N N N N N N N N N N N N N ~ 0 0 0 „~ cc ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 cccccc~~~~cc~ 0 0 0 c~~ m ~~ ~ QQQ QN ~~ Q ~QQQ ~ Q ~~ 3 _ ( p O O O O O O O O O O O O O ( p O O O O O O K `o ~_ E 0 C c a m ~ t o m ~ ~ ~ ~ a d'o y~mmm ~ L~ C C fn U C ~ ~ a m a ~ m E u o m~ 8 c E a'c ~ m-'rn V a'in~w a°w 5 »»»> C 4 C O m j E y ~~ w mac°rn° acio O . ~ c m m e E ~ ° m ~ ~ ° ~ 0 0 ~ ~ m~o~o c o 2Uaa~aaw~ 0 u d Q: $ 5 5 C L' C ~ a ~'~°~° ooo`~U ~ mmm-aaa.g E L F- B O O ~ J J J J E ,~. ~2 N {gyp IL W ~l0 N O y 0 0 L" c~--~~Qmmmm O1 U~ d'o m«« m m m m mQ N N C H U m~ J N (/I (n UJ d ¢~~UOt~n vi~aaaaa T O N C C C mm .1 C ~ « ~ ~ C ~' ° c~ m d m c ~ ~ o ~ ~ < < o ~'E~vv dmmdmi~i~~ v °'~'~ m« b~« m m m a¢~mmu.cnrnv~v~rnaa~ v c lL d c m C O O a d e `o ny ~~a ¢" z ~ m m m C 9 m ~. ~ Q Q ' LL d yP G O O a acima c as ~ ~ ~ C d v ~~ a n c 3 m C O m a ~ $~ a m_ N m ~ c N m d m ~ a`a ~ o c °i m N C a rn c t N m m a v ~ m a~ _d Na N O O O. da m E o Ii d O O Requested budget analysis snap shot Scenario's 1 2 3 2010 2010 2011 YTD 2012 2012 2012 Adopted Revised Adopted ~ OS/2~/2011 Requested Requested Requested General Fund Revenues: Property taxes 9,467,850 9,467,850 9,758,500 4,864,248 9,064,409 9,398,098 9,728,746 MVHC Loss (estimate only) - - (221,100) - (300,000) (300,000) (300,000) All Other Revenues 2,251,950 2,450,411 2,626,050 2,135,878 2,970,450 2,970,450 2,970,450 Total General Revenues 11,719,800 11,918,261 12,163,450 7,000,126 11,734,859 12,068,548 12,399,196 General Fund Expenditures General Government: Mayor & Council 167,650 167,650 177,800 80,056 172,250 172,250 172,250 CableTV 81,650 81,650 77,800 46,368 85,500 85,500 85,500 Administrative Services 470,500 470,500 473,650 383,220 463,100 463,100 463,100 Human Resources 150,450 150,450 150,750 94,923 164,300 164,300 164,300 Elections 38,100 38,100 - - 38,050 38,050 38,050 Finance 447,400 447,400 454,700 306,476 453,300 453,300 453,300 Information Technology 303,150 303,150 266,600 141,878 243,700 243,700 243,700 Legal 234,000 234,000 240,000 170,926 228,000 228,000 228,000 Community Development 67,150 67,150 67,100 41,935 68,050 68,050 68,050 Planning 299,950 299,950 303,550 181,181 300,600 300,600 300,600 City Hall Maintenance 297,000 297,000 300,850 163,927 302,350 302,350 302,350 Energy City 51,350 95,600 51,650 24,886 56,800 56,800 56,800 Contingency 113,100 113,100 75,000 2,698 50,000 50,000 50,000 Total General Government 2,721,450 2,765,700 2,639,450 1,638,474 2,626,000 2,626,000 2,626,000 Public Safety: Police 4,251,350 4,251,350 4,288,650 2,430,262 4,384,700 4,384,700 4,384,700 Fire 680,950 680,950 881,850 563,380 861,900 861,900 861,900 Building Safety 465,550 465,550 465,200 285,579 468,500 468,500 468,500 Environmental 52,200 52,200 56,950 33,524 48,300 48,300 48,300 Total Public Safety 5,450,050 5,450,050 5,692,650 3,312,745 5,763,400 5,763,400 5,763,400 Public Works: Street Maintenance 1,336,950 1,309,400 1,524,450 655,402 1,532,450 1,532,450 1,532,450 Snow Removal 246,550 274,100 262,850 195,531 286,250 286,250 286,250 Equipment Services 246,300 246,300 245,950 138,902 244,550 244,550 244,550 Engineering 178,350 178,350 177,800 72,845 173,100 173,100 173,100 Total Public Works 2,008,150 2,008,150 2,211,050 1,062,680 2,236,350 2,236,350 2,236,350 Culture & Recreation: Parks Maintenance 767,150 767,150 790,350 483,231 805,300 805,300 805,300 Recreation 730,700 737,800 756,900 473,876 785,600 785,600 785,600 Sr. Citizen Programs 203,250 203,250 204,450 118,568 224,000 224,000 224,000 Total Culture & Recreation 1,701,100 1,708,200 1,751,700 1,075,675 1,814,900 1,814,900 1,814,900 Transfers Out 164,050 164,050 205,200 - 146,600 146,600 146,600 Total General Fund Expenditures 12,044,800 12,096,150 12,500,050 7,089,574 12,587,250 12,587,250 12,587,250 General Fund Gap Before Adjustments: (325,000) (177,889) (336,600) (89,448) (852,391) (518,702) (188,054) Revenue Adjustments Use of Fund Balance (41.59'0) 325,000 177,889 336,600 - 339,630 339,630 339,630 Capital Outlay Reserve -capital items 122,100 122,100 122,100 Building Permit Revenue (PW building) 77,000 77,000 77,000 NTC shift from -69'o to -5% (Tax Revenue) 0 0 0 Expenditure Adjustments Fuel $3.75 to $3.25 43,000 43,000 43,000 Expenditure offsets (1%) 125,873 125,873 125,873 Projected Total Budget Gap After Adjustments - - - (89,448) (144,789) 188,901 519,549 Notes: 1 =assumption of 6% decrease in NTC and same tax rate of 45.729'0 2=assumption of 6% decrease in NTC and a tax rate of 47.18% 3=assumption of 6% decrease in NTC and no change in total levy from 2011, tax rate 48.6% No Market Value Homestead Credit No Local Government Aid Fuel is starting at $3.75 in department budgets, wil l be adjusted as we get closer to final budget. N:\Departments\Finance\Finance\BUDGET\Budget Folders by Year\2012 budgets\2012 Summary Budget RESOLUTION 11 - A RESOLUTION FOR THE CITY OF ELK RIVER A RESOLUTION AUTHORIZING THE PROPOSED PROPERTY TAX LEVY FOR COLLECTION IN 2012 WHEREAS, the Elk River City Council has reviewed the City's anticipated expenditures for all funds in 2012; and, WHEREAS, the Elk River City Council has considered projected revenues for all funds in 2012; and, WHEREAS, revenues from sources other than property taxes are not sufficient to meet anticipated expenditures of all funds; and, WHEREAS, debt levies have been adjusted or cancelled based on revenue collections and projections. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River that the following amounts are the maximum to be levied as property taxes payable in 2012: Levy General Fund $ - Library 63,100 Surface Water Management 50,000 City Special Assessments 17,090 2005 Improvement Bonds 88,600 2007 Improvement Bonds 118,400 G.O. capital improvement plan bonds 617,951 Economic Development Tax Abatement 428,504 TOTAL $ - Passed and adopted by the City Council of the City of Elk River this 12th day of September, 2011. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk MEMORANDUM ver TO: Mayor and City Council FROM: Bob Ruprecht, Building Official DATE: September 6, 201 I SUBJECT: Building Department Inspection Management Plan BACKGROUND Per Council discussion on August 1, 2011, we have developed a management plan to track and evaluate inspection workloads. OBJECTIVE The goal of this inspection plan is to track, on a rolling four to six month average, work load of the Building Department in order to keep staffing in line with service demands and work load levels. DISCUSSION The new work load tracking process will allow us to track trends in workload by charting the number of permits issued, inspections completed, and other projects complete and convert that into hours of work performed on a four to six month cycle. I will also look at new and proposed projects and try to anticipate the workload involved with them. With this information I will be able to make an informed recommendation about staffing levels to the Council. In the case of a rising workload trend, the options could be one of, or a combination of, the following. • Contract hours with a licensed inspector or firm. • Hire a temporary full time inspector. • Hire a full time position. • Reduce services i.e. energy audits, rental inspections, snow plowing. In the case of a slowing workload trend the options could be one of, or a combination of, the following. • Reduced hours for one employee. • Reduce hours evenly for all employees. N:\I'ublic Bodies\City Council\Council RCA\Agenda Packet\09-06-2011\inspectionmanagementplan[1].docx • Furlough one or more employees as necessary. I will update the Council based on the present and forecasted data at least three times annually. With this plan in place I believe the Building Department will be able to work efficiently and in the most cost effective manor available for the citizens of Elk River. N:\Public Bodies\City Council\Council RCA\Agenda Packet\09-OG-2011\inspectionmanagementplan[1].docx llLrr~ 2012 City of Elk River Budget Prososal $144,789 Current deficit using no tax rate increase. I am very concerned about the tax rate. Tax rate increase to me is increase in taxes. After talking to the County Assessor, he told me residential values are dropping 8-10% in 2012 while commercial is decreasing 2%. We take advantage of increased tax revenue from homeowners when their property values go up. Why wouldn't we lower their tax by the same token when their value goes down? Also if tax rate is increased commercial properties will see a substantial increase in 2012 taxes. 125,873 Add back in 1 % across the board budget cut (60,000) Cut Energy City program-reduction in hours in Environmental staff. Based on the percentages given to us, Energy City takes approximately 20% of the staff's time. Hour reductions would happen for one or both of the department employees. Project Conserve was budgeted for $10,000. It appears amount will be less than that. Take the lower amount out of Council Contingency. ERMU should manage Project Conserve. (64,000) Put off hiring patrol officer-We operated without this position for most of 2011. 150,000 Pay increase for staff (2%). We have a lot of requests for more employees. The majority of taxpayers are asking for reductions in government, not increases. To me, it comes down to either hiring more staff or rewarding the employees who have worked extremely hard to keep us going. I favor rewarding the current employees. (82,000) Lay off building official. The Code Enforcement Official would work 50% of the time in code enforcement and 50% as a building inspector, thus causing on a reduction of four hours per day in the Building department. Code enforcement is more of a discretionary item. From 2005 to 2007 permit income exceeded building department wages and benefits by $1.9 million. From 2008 through June 30, 2011 building department wages and benefits have exceeded permit income by $31,000. (100,000) NTC drops 5%, not 6%. If the NTC does drop by 6%, reduce all budgets by '/2% ($65,000) and add $35,000 to ERMU contribution (115,000) Take from Landfill fund. I don't have a problem using some of this money to help the general fund when it needs it. Extraordinary times require extraordinary measures. ayor John Dietz September 6, 2011