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12.B. SR 10-17-2011P~D~ Item # 12.B. MEMORANDUM TO: Mayor and City Council FROM: Tim Simon, Finance Director DATE: October 17, 201 SUBJECT: 2012 Budget Update 2012 Expenditure Update On September 12, 2011 the general fund budget summary indicated an expenditure amount of $12,580,750 and with the $157,950 cost of living adjustment included in the preliminary budget the amount is currently at $12,738,700. It should be noted that Council has not approved the cost of living adjustment at this time, but it is included for comparison purposes. Over the next two months we will have some adjustments for fuel, property insurance, and some other miscellaneous expenditures as more information becomes available. Net Tax Capacity (NTCI We recently received an updated net tax capacity (NTC) estimate from the County. The new estimate of a 5.66 percent decrease in NTC related to values is very close to our original estimate. The new state law change in regards to the Market Value exclusion calculation decreased our NTC another 5.41 percent. Overall if you combine the change in value plus the Market Value exclusion the NTC decreased 11.07 percent. Keep in mind that the final NTC typically changes slightly after abatements and other corrections are made by the County before the final NTC is calculated. Tax Levy Discussion Tonight we will have discussion on the tax levy for 2012. On September 12, 2011 the Council adopted a maximum tax levy of $11,112,391 which includes no additional tax revenue from the 2011 levy amount. That levy and the amount allocated to the general fund is reflected in scenario's three and six of the 2012 budget summary worksheet. That maximum levy reflects a $140,254 gap before we adjust our MVHC loss of $300,000 (negative revenue) which was an estimate based on the old system prior to the law change for MV exclusion. Adopted 2012 maximum levy is broken out as follows with a comparison to 2011 adopted levy: N:\Public Bodies\City Council\Council RCA\Agenda Packet\10-17-2011\2012budget101711[1].docx 2011 2012 Difference General Fund 9,758,513 9,728,746_ __(29,767); ;Library 63,100 , 63,100 Surface Water Management ? .._ ._ _ _ ~ _. ~ _ . 50,000 ~ee_ _ .. _ ~_ 50,000 __.. ,_. ~..._. _ . .._. _ ____ ._ 'Debt Service 813,525 842,041 28,516 Economic Development Tax Abatement ( r..,, ......, _ _.. 427,253 428,504: 1,251 11,112, 391 '; 11,112,391 - The 2012 budget worksheet is updated with various scenarios to give the Council an update with the new information received from the County. Scenarios 1-3 reflect looking at the 5.66 percent decrease as it relates to the change in market values on NTC for Elk River, excluding the state law change on MV exclusion. This comparison reflects a more accurate comparison to the tax rate from last year. Scenarios 4-6 reflect the total change in NTC, including both the values and NIV exclusion impacts. This will give the Council a sense of what impact the MV exclusion has from a comparison standpoint. I will have the tax impact calculator on the overhead if the Council would like to try some different impacts to properties. Conclusion• After the discussion on the levy for 2012 and personnel requests, staff will continue to explore ideas to balance the budget before our December 5`'' budget meeting. Attachments• • 2012 position requests summary • Preliminary 2011 tax values (for proposed 2012 tax notices) • 2012 updated budget analysis snapshot • 2012 appropriations summary • Tax impact scenarios N:\Public Bodies\City Council\Council RCA\Agenda Packet\10-17-2011\2012budget101711[1].docx m m E £ rn m 0 m m 0 0 v v d d Q E a a a a m m O W ~ C -p _ ml f0 m V ( O O (f(pDp O C_ V ~ M M O 3~'0~ c ~ o v ~ 5 m n ao'o rw w M aci ~ a v ~ v ~ co N y H 0 V r ~' W N r N O M O M !O O ? 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C/N 55330-4001 763-241-286? ®/ 1-800-438-056 ~ max: ; 63-241-286° l~sb: vr;~4~1~/.co.s,herourro.mn.us 'L it~~ .~ Illill.stratars, Clerks and 1~ir1a1_; e Qiiicers -, ,- A ,~ ~v' Tl~c: i^ ", ~y,,;~,i tT., S ,i ~ ~ r~ r 1'S _ _11U ~.locl 1.,~r_~t : ,~:_~...~.s~.ator_ a11:~ inch-. E~.~1ce i ro111: Dia11e _'~ mold Re: Preliminary 2011 Tat ~'a'_ues (ior Proposed 2012 Tai ?notices; ~~`RBURNE CCU :re 2 `~ ~;, ~ ,_ -- `=- -= P`~~4A+14 ES~S f'OiOi'F1n!? 1S the ea1'l~' Pay 2012 het Tul Capacity a11d :'larliCt ~~alUe 1it0rlliat10I1 f01' }'OLIr District. Count;-v,~:de, there is a 10.2% decrease in ?'v et Tam City, Township or School ' Ca,>aacity and a 12.25°% decrease in total county Ta~ahle Market Value. Please reme111ber that these values nla}~ drop slightly by Melt slarulg «-ildr final values are certiiled, due to aua~eillents. 1?rOpeI'tV tai f0i%n.itUreS, late 110111esteadS aIld ClerlCal COrreCtIO11S. Township/City%School District IJIk P.iver Cin~ 20 i 1 let Tai, C~~~~aeity Values IZE ~~ P P Less Captured TIP Tas Rate NTC Taxable I.larket Value I~4V Rererendum 2 ~.087,94~ n ~1 ("74.1011 !~ ~o,~~ r.3V.~.e`t'i' 2.0~3.301,~~2 2012 Preliminarv_NTC Values 22.308.103 n (69.591) 21.~;1~ 212 1.794.282.900 2.012,672,327 1,887,09>,900 --- Requested budget analysis snap shot General Fund Revenues: Property taxes MVHC Loss (estimate only) All Other Revenues Total General Revenues General FUnd Expenditures General Government: Mayor & Council Cable N Administrative Services Human Resources Elections Finance Information Technology Legal Community Development Planning City Hall Maintenance Energy City Contingency Total General Government Public Safety: Police Fire Building Safety Environmental Total Public Safety Public Works: Street Maintenance Snow Removal Equipment Services Engineering Total Public Works Culture & Recreation: Parks Maintenance Recreation Sr. Citizen Programs Total Culture & Recreation Transfers Out Total General Fund Expenditures General Fund Gap Before Adjustments: Revenue Adjustments Use of Fund Balance (41.5%) Early Retiree Reinsurance Program Reimb Expenditure Adjustments Fuel $3.75 to $3.25 Expenditure offsets (1%) Projected Total Budget Gap After Adjustments Estimated Tax Rate 48.50% 50.00% 51.40% 45.72% 48.56% 51.40% 1=assumption of 5.66% decrease in values and a tax rate of 45.72%excluding MV exclusion value law change and the effect it will have on the tax rate 2=assumption of 5.66%decrease in vlaues and a tax rate of 47.10%excluding MV exclusion value law change and the effect it will have on the tax rate 3=assumption of 5.66% decrease in values and a tax rate of 48.47%, excluding MV exclusion value law change and the effect it will have on the tax rate 4 =assumption of 5.66% decrease in values and 5.41% due to MV exclusion and same tax rate of 45.72% 5= assumption of 5.66%decrease in values and 5.41%due to MV exclusion and a tax rate of 48.56% 6=assumption of 5.66%decrease in values and 5.41%due to MV exclusion and no change in total levy from 2011, tax rate 51.4% Includes 2%cost of living adjustment No Local Government Aid fuel is starting at $3.75 in department budgets, will be adjusted as we get closer to final budget. MV Loss (5.66%) MV Loss & MV exclusion combined Scenario's Scenario's 1 2 3 4 5 6 Maximum Maximum 2010 2010 2011 *~~ - ~ -. 2012 2012 2012 2012 2012 2012 Adopted Revised Adopted ''~ _ Requested Requested Requested Requested Requested Requested 9,467,850 9,467,850 9,758,500 4,949,678 9,099,149 9,415,559 9,728,746 8,497,458 9,111,245 9,728,746 - - (221,100) - (300,000) (300,000) (300,000) (300,000) (300,000) (300,000) 2,251,950 2,450,411 2,626,050 2,371,350 3,169,700 3,169,700 3,169,700 3,169,700 3,169,700 3,169,700 11,719,800 11,918,261 12,163,450 7,321,028 11,968,849 12,285,259 12,598,446 11,367,158 11,980,945 12,598,446 167,650 167,650 177,800 99,365 172,250 172,250 172,250 172,250 172,250 172,250 81,650 81,650 77,800 54,497 86,800 86,800 86,800 86,800 86,800 86,800 470,500 470,500 473,650 425,945 470,700 470,700 470,700 470,700 470,700 470,700 150,450 150,450 150, 750 111, 045 166, 950 166,950 166,950 166,950 166,950 166, 950 38,100 38,100 - - 38,050 38,050 38,050 38,050 38,050 38,050 447,400 447,400 454,700 346,178 459,950 459,950 459,950 459,950 459,950 459,950 303,150 303,150 266,600 160,131 246,700 246,700 246,700 246,700 246,700 246,700 234,000 234,000 240,000 190,271 228,000 228,000 228,000 228,000 228,000 228,000 67,150 67,150 67,100 49,092 69,350 69,350 69,350 69,350 69,350 69,350 299,950 299,950 303,550 212,638 305,500 305,500 305,500 305,500 305,500 305,500 297,000 297,000 300,850 188,809 305,200 305,200 305,200 305,200 305,200 305,200 51,350 95,600 51,650 31,799 50,900 50,900 50,900 50,900 50,900 50,900 113,100 113,100 75,000 2,698 50,000 50,000 50,000 50,000 50,000 50,000 2,721,450 2,765,700 2,639,450 1,872,468 2,650,350 2,650,350 2,650,350 2,650,350 2,650,350 2,650,350 4,251,350 4,251,350 4,288,650 2,829,812 4,449,250 4,449,250 4,449,250 4,449,250 4,449,250 4,449,250 680,950 680,950 881,850 528,353 867,950 867,950 867,950 867,950 867,950 867,950 465,550 465,550 465,200 334,502 476,400 476,400 476,400 476,400 476,400 476,400 52,200 52,200 56,950 39,418 48,950 48,950 48,950 48,950 48,950 48,950 5,450,050 5,450,050 5,692,650 3,732,085 5,842,550 5,842,550 5,842,550 5,842,550 5,842,550 5,842,550 1, 336, 950 1, 309, 400 1, 5 24, 450 1,186, 046 1, 543,150 1, 543,150 1, 543,150 1, 54 3,150 1, 54 3,150 1, 543,150 246,550 274,100 262,850 195,531 288,650 288,650 288,650 288,650 288,650 288,650 246,300 246,300 245,950 162,956 248,350 248,350 248,350 248,350 248,350 248,350 178,350 178,350 177,800 85,547 175,550 175,550 175,550 175,550 175,550 175,550 2,008,150 2,008,150 2,211,050 1,630,080 2,255,700 2,255,700 2,255,700 2,255,700 2,255,700 2,255,700 767,150 767,150 790,350 583,011 813,100 813,100 813,100 813,100 813,100 813,100 730,700 737,800 756,900 523,809 798,100 798,100 798,100 798,100 798,100 798,100 203,250 203,250 204,450 136,736 226,750 226,750 226,750 226,750 226,750 226,750 1,701,100 1,708,200 1,751,700 1,243,556 1,837,950 1,837,950 1,837,950 1,837,950 1,837,950 1,837,950 164,050 164,050 205,200 - 152,150 152,150 152,150 152,150 152,150 152,150 12,044,800 12,096,150 12,500,050 8,478,189 12,738,700 12,738,700 12,738,700 12,738,700 12,738,700 12,738,700 (325,000) (177,889) (336,600) (1,157,161) (769,851) (453,441) (140,254) (1,371,542) (757,755) (140,254) 325,000 177,889 336,600 - 339,630 339,630 339,630 339,630 339,630 339,630 20,390 20,390 20,390 20,390 20,390 20,390 43,000 43,000 43,000 43,000 43,000 43,000 127,387 127,387 127,387 127,387 127,387 127,387 0 0 0 0 0 0 (1,157,161) (239,444) 76,966 390,153 (841,135) (227,348) 390,153 N:\Departments\Finance\Finance\BUDGET\Budget Folders by Year\2012 budgets\2012 Summary Budget APPROPRIATIONS SUMMARY 2009 2010 2011 2011 2012 % of % $$ 2011 ACTUAL ACTUAL ADOPTED AMENDED Preliminary Total Change Increase % of Total General Govemment MAYOR&COUNCIL $ 154,894 $ 152,891 $ 177,800 $ 177,800 $ 172,250 1.35% -3.12% $ (5,550) 1.42% CABLE TV 68,737 71,027 77,800 77,800 86,800 0.68% 11.57% 9,000 0.62% ADMINISTRATION 449,684 464,493 473,650 473,650 470,700 3.70% -0.62% (2,950) 3.79% HUMAN RESOURCES 142,744 148,826 150,750 150,750 166,950 1.31% 10.75% 16,200 1.21% ELECTIONS - 30,283 - - 38,050 0.30% #DIV/0! 38,050 0.00% FINANCE 437,571 445,122 454,700 454,700 459,950 3.61% 1.15% 5,250 3.64% INFORMATION TECHNOLOGY 248,260 285,211 266,600 266,600 246,700 1.94% -7.46% (19,900) 2.13% LEGAL 213,210 222,952 240,000 240,000 228,000 1.79% -5.00% (12,000) 1.92% COMMUNITY DEVELOPMENT 102,487 66,643 67,100 67,100 69,350 0.54% 3.35% 2,250 0.54% PLANNING 294,984 299,609 303,550 303,550 305,500 2.40% 0.64% 1,950 2.43% BUILDING MAINTENANCE 260,953 281,614 300,850 300,850 305,200 2.40% 1.45% 4,350 2.41 CONTINGENCY 6,434 10,766 75,000 75,000 50,000 0.39% -33.33% (25,000) 0.60% ENERGY CITY 41 729 72,194 51 650 51 650 50 900 0.40 % -1.45 % (750) 0.41 General Govemment 2,421,687 2,551,631 2,639,450 2,639,450 2,650,350 20.81 % 0.41 % 10,900 21.12% Public Safety POLICE 3,999,708 4,192,403 4,288,650 4,288,650 4,449,250 34.93% 3.74% $ 160,600 34.31 FIRE 622,588 623,834 774,450 774,450 764,050 6.00% -1.34% (10,400) 6.20% EMERGENCY MANAGEMENT 26,852 29,064 107,400 1D7,400 103,900 0.82% -3.26% (3,500) 0.86% BUILDING SAFETY 560,986 453,741 465,200 465,200 476,400 3.74 % 2.41 % 11,200 3.72 ENVIRONMENTAL 70,897 52,762 56,950 56950 48950 0.38% -14.05% (8000) 0.46% PublfcSafety 5,281,031 5,351,804 5,692,650 5,692,650 5,842,550 45.86% 2.63% 149,900 45.54% Public Worka STREETS 1,276,703 1,286,247 1,524,450 1,524,450 1,543,150 12.11% 1.23% $ 18,700 12.20% SNOW REMOVAL 205,707 285,975 262,850 262,850 288,650 2.27% 9.82% 25,800 2.10% EQUIPMENT SERVICES 238,461 223,592 245,950 245,950 248,350 1.95% 0.98% 2,400 1.97% ENGINEERING 107,137 91,387 177,800 177800 175550 1.38% -1.27% (2250) 1.42% Public Worka 1,828,008 1,887,201 2,211,050 2,211,050 2,255,700 17.71 % 2.02 % 44,650 17.69% Cuture i4 Recreation PARK MAINTENANCE 728,358 791,996 790,350 790,350 813,100 6.38% 2.88% $ 22,750 6.32% RECREATION 722,825 674,228 756,900 756,900 798,100 6.27% 5.44% 41,200 6.06% SR. CITIZEN PROGRAMS 187,583 190,491 204,450 204,450 226 750 1.78 % 10.91 % 22 300 1.64 Culture&Recreatfon 1,638,766 1,656,715 1,751,700 1,751,700 1837950 14.43% 4.92% 86250 14.01% TRANSFERS 233,104 130,337 205,200 205,200 152150 1.19% -25.85% (53050) 1.64% TOTAL $ 11,402,596 $ 11,577,688 $ 12,500,050 $ 125D0050 $ 12738700 100.00% 1.91% $ 238650 100.00% Personal Other Services Capkal Services Supplies & Charges Outlay/Transfers Total 2012 Percent of Total General Fund 71.27% 9.06% 17.51 % 2.15 % 100.00% GENERAL FUND EXPENDITURES 2009 - 2012 57,000,000 _. -- ____.. lonz/zo11 Scenerio 1 (tax rate 48.50%) 45.72 48.500 MV 'NV Property Value Tax Capacity Tax Capacity Rate Credit Exclusion Total Estimated Tax Dollar Percent 2011 2012 2011 2012 2011 2012 2011 2x12 2011 2012 thane than e 200,000 188,000 2,000 1,677 914.40 813.25 $ (62.61) 20,320 $ 851.79 $ 813.25 $ (38.55) -4.53% Scenerio 2 (tax rate 50.00%) Property Value 2011 2012 201 200,000 188,000 2 Scenerio 4 (same tax rate as Property Value 2011 2012 201 200,000 188,000 2 Scenerio 5 (tax rate 48.56%) 45.72 50.000 MV MV Tax Capacity Tax Capacity Rate Credit Exclusion Total Esti mated Tax Dollar Percent 1 2012 2011 2012 2011 2012 2011 2012 change than e ,000 1,677 914.40 838.40 $ (62.61) 20,320 $ 851.79 $ 838.40 $ (13.39) -1.57% 201145.72%) 45.72 45.720 MV Tax Capacity Tax Capacity Rate Credit _._ _ Total Esti mated Tax Dollar Percent 1 2012 2011 2012 2011 2011 2012 change change ,000 1,677 914.40 766.63 $ (62.61) 20,320 $ 851.79 $ 766.63 5 (85.16) -10.00% Property Value Tax Capacity 2011 2012 2011 2012 200,000 188,000 2,000 1,677 225,000 211,500 2,250 1,933 250,000 235,000 2,500 2,189 45.72 48.560 Tax Capacity Rate 2011 2012 914.40. 814.25 1,028.70 938.64 1,143.00 1,063.03 1, 257.30 1,187.41 1, 371.60 1,311.80 MV Credit 2011 $ (62.61) 20,320 $ (55.29) 18,205 $ (47.96) 16,0911 $ (40.64) 13,975 $ (33.32) 11,8611 Total Estimated Tax 2011 2012 $ 851.79 $ 814.25 $ 973.41 $ 938.64 $ 1,095.04 $ 1,063.03 $ 1,216.66 $ 1,187.41 $ 1,338.28 $ 1,311.80 Dollar Percent change change $ (37.54) -4.41% $ (34.77) -3.57% $ (32.01) -2.92% $ $ (29.24) (26.48) -2.40% -1.98% 275,000 258,500 2,750 2,445 300,000 282,000 3,000 2,701 Scenerio 6 (same total t Property Value ax levy as 2011, tax rate Tax Capacity 2011 2012 2011 2012 200,000 188,000 2,000 1,677 225,000 211,500 2,250 1,933 250,000 235,000 2,500 2,189 275,000 258,500 2,750 2,445 300,000 282,000 3,000 2,701 of 51.4056) 45.72 51.400 Tax Capacity Rate 2011 2012 914.40 861.88 1,028.70 993.54 1,143.00 1,125.20 1, 257.30 1, 256.86 1, 371.60 1,388.52 Residential decrease of 6 percent in 2012 for comparison purposes. MV Credit 2011 ~atV I_s:cl~.;lion 2^ - Total Estimated Tax 2011 2012 Dollar change Percent change $ (62.61) 20,320 $ 851.79 $ 861.88 $ 10.08 1.18 $ (55.29) 18,205 $ 973.41 $ 993.54 $ 20.12 2.07 $ (47.96) 16,090 $ 1,095.04 $ 1,125.20 $ 30.16 2.75 $ (40.64) 13,975 $ 1,216.66 $ 1,256.86 $ 40.20 3.30 $ (33.32) 11,860 $ 1,338.28 $ 1,388.52 $ 50.24 3.75 2011 2012 City Tax Rate 45.72% 48.56% On a 5500,000 Progeny $ 500,000 $ 490,000 Tax Capacity 9,250 9,050 Total City Property Tax $ 4,229.10 $ 4,394.68 $ 165.58 3.92% (estimate only) ** =assumes 2% decrease