7.1. SR 12-01-2014 City of
Elk=' Request for Action
River
To Item Number
Mayor and City Council 7.1
Agenda Section Meeting Date Prepared by
Public Hearinj December 1, 2014 Tim Simon, Finance Director
Item Description Reviewed by
2015 Budget and Tax Levy Cal Portner, City Administrator
1. Budget and Levy Presentation Reviewed by
2. Open Meeting for Public Comment
3. Resolution Authorizing the Property
Tax Levy for Collection in 2015
4. Approve 2015 General, Special
Revenue, and Enterprise Fund Budgets
Action Requested
• Open meeting for public comment
• Adopt,by motion, a resolution authorizing the property tax levy for collection in 2015
• Adopt,by motion,the 2015 General, Special Revenue, and Enterprise Fund budgets
Background/Discussion
In May, departments began work on the 2015 department goals and requested budgets. From June to
September, Council reviewed the 2015 goals and the expenditure detail. Following the review and
discussion, the budgets were adjusted and amended. In September,the Council approved the proposed
(maximum) tax levy that was used to calculate the city tax capacity rate for the proposed property tax
notice that was mailed to each property owner in November. As the Council is aware, the final levy may
be less than,but may not be more than, the levy approved on September 15.
The following is a summary of the 2014 tax levy resolution for taxes payable in 2015 and the budget:
• The proposed (maximum) tax levy is $10,056,118 which is an increase of 2.05% over last year.
The Council has directed staff to draft a final tax levy resolution of$10,017,357 which is an
increase of$163,522 or 1.66% over last year.
• The 2015 General Fund budgeted expenditures are $13,312,800 and include: funds for a drug task
force officer, an HR technician, additional buckthorn removal, fireworks, and cost of living
adjustment.
• The 2014 tax levy resolution for taxes payable in 2015 is lower than the tax levy resolution in 2007
for taxes payable 2008.
Tax Lew
On November 17, the Council reviewed budget options and discussed decreasing the final levy for taxes
payable 2015 to $10,017,357 which is a 1.66%increase from the taxes payable 2014 adopted levy. The
preliminary estimated Net Tax Capacity (NTC) increased by 5.12% to $21,460,590 for taxes payable in
2015. Last year, the NTC increased 0.45%. The main reason for the change relates to market value
increases and new growth. The final NTC will change slightly as the county makes final corrections and
adjustments before calculating taxes in early 2015. The tax capacity rate based on the maximum tax levy
P a w E R E U 6 Y
NaA f RE]
is 47.30%which is a decrease from 48.54%last year. With the proposed levy,if approved, the tax
capacity rate will be adjusted downward to approximately 47.11%.
There are three primary tax entities: the county, school district, and city,that receive property taxes paid
by property owners. The city receives approximately 30% of the total property tax the property owner
will pay. The balance,approximately 70%,goes to Sherburne County,Independent School District 728,
Regional Rail Authority,Economic Development Authority, and Housing Redevelopment Authority.
Additionally, the State of Minnesota also receives part of the property taxes on commercial and industrial
property,the city's share percentage decreases below 23% for those properties that pay state tax.
The city uses property tax revenue for several purposes. The majority, 94%,is used to fund General
Fund expenditures such as police, fire, street maintenance,general government,parks and recreation.
The remaining 6%pays for debt service, tax abatement,and library operations.
General Fund Budget
The 2015 General Fund budget is at$13,312,800 which is a 3.44%increase over 2014. Public safety
expenditures (police, fire, emergency management,building safety, code enforcement, and environmental)
account for 48% of the General Fund Budget. General government,public works, and culture and
recreation make up the majority of the balance. Personal service expenditures are the largest type of
expenditure due to the fact that the city's core objective is to provide service to its residents and
businesses. Personal service expenditures are 77% of the operating budget. The budget does include a
2% cost of living pay adjustment for all employees in 2015.
Financial Impact
Summary of all 2015 Budgets
Below is a summary of the proposed budgets to be approved, all of which were reviewed by the Council.
General Fund $13,312,800
Special Revenue Funds:
Library $ 98,400
Ice Arena $ 706,100
Landfill $ 105,400
Safety $ 37,100
Enterprise Funds:
Revenues Expenditures Net Effect
Sewer $6,292,200 $13,448,910 $(7,156,710)*
Garbage $1,338,350 $ 1,391,750 $ (53,400)
Liquor $6,892,550 $ 6,577,500 $ 315,050**
Storm Sewer $ 468,900 $ 958,500 $ (489,600)***
*Includes depreciation ($977,950), capital projects ($10,875,100), State of MN grant ($2,800,000), debt
service ($261,050), and a 3% sewer rate adjustment.
**Includes depreciation ($123,000).
***Includes depreciation ($433,750)
N:\Public Bodies\Agenda Packets\12-01-2014\Final\x7.1 sr Budget staff report memo 1201.docx
Attachments
• Tax levy resolution
• General Fund summary
N:\Public Bodies\Agenda Packets\12-01-2014\Final\x7.1 sr Budget staff report memo 1201.docx
City of
Elk Resolution 14 -
1(iver
A Resolution of the City of Elk River Authorizing the Proposed Property
Tax Levy for Collection in 2015
WHEREAS, the Elk River City Council has reviewed the City's anticipated
expenditures for all funds in 2015; and,
WHEREAS, the Elk River City Council has considered projected revenues for
all funds in 2015; 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 2015:
Lev
General Fund $ 9,420,700
Library 63,100
City Special Assessments 4,221
2010A G.O. Capital Improvement Plan Bonds 37206
Economic Development Tax Abatement 156,450
TOTAL $ 10,017,357
Passed and adopted by the City Council of the City of Elk River this 1 st
day of December, 2014.
John J. Dietz,Mayor
ATTEST:
Tina Allard, City Clerk
r P 0 W E R E 0 0 Y
CITY OF ELK RIVER
Requested budget analysis snap shot(General Fund)
2014 YTD 2015 %of
Adopted 10/30/2014 Preliminary budget change
General Fund Revenues:
Property taxes 9,181,300 4,386,835 9,420,750 70.8% 2.6%
All Other Revenues 3,689,200 2,935,126 3,892,050 29.2% 5.5%
Total General Revenues 12,870,500 7,321,961 13,312,800 100.00% 3.44%
General Fund Expenditures
General Government:
Mayor&Council 150,550 115,605 141,050 1.06% -6.31%
Cable TV 93,000 70,858 108,400 0.81% 16.56%
Administrative Services 594,000 475,226 600,000 4.51% 1.01%
Human Resources 96,000 73,539 161,750 1.21% 68.49%
Elections 38,750 14,131 13,350 0.10% -65.55%
Finance 560,850 469,952 567,450 4.26% 1.18%
Information Technology 297,600 219,233 332,150 2.49% 11.61%
Legal 218,000 157,651 217,600 1.63% -0.18%
Community Development 325,500 259,885 339,600 2.55% 4.33%
Planning 192,500 146,939 195,550 1.47% 1.58%
City Hall Maintenance 544,950 445,963 569,200 4.28% 4.45%
Energy City 12,100 4,473 10,100 0.08% -16.53%
Contingency (47,500) - (95,000) -0.71% 100.00%
Total General Government 3,076,300 2,453,455 3,161,200 23.7% 2.8%
Public Safety:
Police 4,475,200 3,389,492 4,803,200 36.08% 7.33%
Fire 788,050 505,879 817,350 6.14% 3.72%
Code Enforcement 88,600 70,026 89,300 0.67% 0.79%
Building Safety 617,950 469,277 628,950 4.72% 1.78%
Environmental 31,800 20,915 30,150 0.23% -5.19%
Total Public Safety 6,001,600 4,455,589 6,368,950 47.84% 6.12%
Public Works:
Street Maintenance** 1,239,750 975,664 1,187,300 8.92% -4.23%
Snow Removal 277,750 246,463 297,550 2.24% 7.13%
Equipment Services 184,150 143,651 196,550 1.48% 6.73%
Engineering* 166,850 163,326 219,550 1.65% 31.59%
Total Public Works 1,868,500 1,529,104 1,900,950 14.28% 1.74%
Culture&Recreation:
Parks Maintenance 938,450 730,819 967,150 7.26% 3.06%
Recreation 732,000 560,675 698,950 5.25% -4.52%
Sr.Citizen Programs 193,550 153,866 215,600 1.62% 11.39%
Total Culture&Recreation 1,864,000 1,445,360 1,881,700 14.13% 0.95%
Transfers Out 60,100 - - 0.00% -100.00%
Total General Fund Expenditures 12,870,500 9,883,508 13,312,800 100.00% 3.44%
General Fund Gap Before Adjustments: - (2,561,547) -
Revenue Adjustments
Expenditure Adjustments
■
Projected Total Budget Gap After Adjustments - (2,561,547)
Notes:
*=offset by increased reimbursement for services for 2015 road projects
**=road maintenance items moved to pavement management fund
N:\Departments\Finance\Finance\BUDGET\Budget Folders by Year\2015 budgets\2015 Summary Budget
12/02/2014
2015 Budget and Tax Levy
City Council Meeting
December 1, 2014
lti rc r
Overview
• Vision and Goals
• Summary of Budget Process
• Proposed Tax Levy
• Budget Overview
• General Fund
• Special Revenue
• Enterprise
• Public Comment
• Tax Levy & Budget approval
Vision and Goals:
Our Vision -Abounding in natural beauty, Elk
River is a vibrant, historic river town that promotes
an active lifestyle in an innovative and involved
community offering unlimited opportunities.
12/02/2014
Goals supporting the Vision
• Innovation
• Community Development
• Beautification
■ Opportunities
■ Planning and Positioning
Budget Process
April — December 2014
• Review long -range financial model —Apr. 21
• Budget workpapers to departments — May 8
• Department budget requests — June 2
• City Council budget work sessions — 9 total
• Adopt preliminary tax levy —Sept. 15
"fAr"r, r__ 3,
47,--
Budget Process
April — December 2014
• County prepares /mails proposed tax
notices to property owners — Nov.
• Public Comment Meeting — Dec. I
• Adopt 2015 property tax levy and budgets
• Final levy certified to county by Dec. 29
Other Public Meetings
■ Sherburne County —Dec. 4
■ Elk River Area Schools —Dec. 8
Taxes and Values
• Public Notices
• Determine Property Tax Amount
• Taxable Market Value
■ Allocation
■ Distribution
■ Class rates
Public Notices
pertYValuation Prope Tax Notice Rr ^rtYTax Statement
ARCH NOVE RCHI
J F M A M J J A 5 O N D J F MD
Year 1 Year 2
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r
Property Tax ' —
$i,75value of o
Calculation T ot
allal value of
property
�e Eq—
x r•ea x mea „TUrom $21,261,593
Actual value taxed
�r
r r Pm i MFin— Reeeaed,
Class Rates
Type of Pro
Residential Homestead
first $500,000 1.00%
over $500,000 1.25%
Commercial /Ind.
first $150,000 1.50%
over $150,000 2.00%
Rental Housing
four or more units 1.25%
Seasonal Residential
Recreational
first $500,000 1.00%
over $500,000 1.25%
For more class rates see www.revenue.state.mn.us
12/02/2014
M
Other Impacts
Changes made to one area may have an
impact on another
• Value changes
• Legislative 1.
• Improvements
F.
F
CityTax Levy
• Tax Levy History
• Tax Levy Components
• Levy by Use
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5
Tax Levy History 00.
Tax Levy Components
Mb" 2014 Prop
�+ Proposed 4
General Fund $9,181,289 $9,420,700 2.61%
Library 63,100 63,100 0.00%
Surface Water Mgmt. 50,000 - - 100.00%
Debt Service 371,459 377,107 1.52%
Tax Abatement 187,987 156_450 - 16.78%
Total $ 9,853,835 $10,017,357 1.66%
Dollar C h a nge $163,522
Preliminary Levy $10,056,118 2.05%
Dollar Change $202,283
Tax Levy by Use
Library Economic
1% Development
Debt Service 1%
4%
General Fund
94%
12/02/2014
A
General Fund Budget
■ Revenues
■ Expenditures
■ 2015 Budget Changes
■ Expenditure —Changes
■ Cost of City Services
Revenues
2015
Proposed Difference Percent
Budget Chang
General Taxes $ 9,306,300 $ 9,545,750 $239,450 2.57%
License and Permits 575,900 599,400 23,500 4.08%
Intergov'I Revenue 277,900 286,550 8,650 3.11%
Charges For services 732,800 831,200 98,400 13.43%
Fines and Forfeits 122,200 125,000 2,800 2.29%
Other Revenue 207,000 217,000 10,000 4.83%
Transferin 1,648,400 1,707,900 59,500 3.61%
Total $12,870,500 $13,312,800 $442,300 3.44%
Revenues
omen e,.i Fund Ra-en-
8
2q BudZI poz d
513
al 2,800
H... -d Porten
lY �
Qtargcsfor 5ervic
6Y
In[ergove..
Reven.ue 1
2Y
Licenre & Pertni�/
4%
12/02/2014
7
Expenditure Changes
■ Service level change
• Drug Task Force Officer (FT)
• Buckthorn removal
• Fireworks
■ Sales tax exemption continues
■ COLA /Pension changes
■ Adjustments for inflation
■ Staff changes:
• HR Technician (FT)
• Staff hours adjustments (PT /Seasonal /PERA)
Expenditures — Changes by Function
Expenditures by Function
Culture &
Recreation
14.1% General
Government
Public Works 23.7%
14.3%
Public Safety
47.8%
12/02/2014
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2015
2014
Proposed
Percent
Budget
Budget
Difference
Change
General Government
$ 3,076,300 $
3,161,200 $
84,900
2.76%
Public Safety
6,001,600
6,368,950
367,350
6.12%
Public Works
1,868,500
1,900,950
32,450
1.74%
Culture & Recreation
1,864,000
1,881,700
17,700
0.95%
Operating Transfer Out
60,100
(60,100)
- 100.00%
Total
$ 12,870,500 $ 13,312,800 $
442,300
3.44%
Expenditures by Function
Culture &
Recreation
14.1% General
Government
Public Works 23.7%
14.3%
Public Safety
47.8%
12/02/2014
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Expenditures by Category
Other Charges.
and Services
16. SW :::..
mmmm.
Cost of City Services
Per Month
based on population of 23,370
General Government $ 11.26
Public Safety 22.72
Public Works 6.79
Culture & Recreation 6.73
Total $47.50
r �
Tax I m pacts
■ City Tax Comparison
■ Residential Tax Bill - Distribution
■ Commercial Tax Bill - Distribution
■ Tax Rate Comparison
• City Tax Estimates
12/02/2014
E
2014 Statewide City Average 45.751%
2015 Sherburne County Average 56.1%
Tax Rate History -Sher hune County
F-
12/02/2014
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pmp8gTaDaa -M5
54m4 m"*
City Tax Comparison - 2014
$1,200
$1,000
$800
$600
$400
$200
$
Source —LMC Value - $150,000 Home
Tax Capacity Rate
city, county, & school comparison (estimates
only)
W15 e d
City 48.544
47.3 47.1
EDA 1.466
1.532
HRA 1.147
1.217
Ref. (YMCA) 0.01514
0.01574
County 54.861
52.106
Rail 2.374
2.206
School 51.286
50.873
Ref. 0.14088
0.13091
TOTAL 159.678
155.249
12/02/2014
11
City Tax Estimates
Preliminary Final with revised levv
MMMJM 2014/ -■ Di�
Chenpe
Residential $692.23 $674.76 ($17.47) (2.52 %) ($20.39) (2.95 %)
$165,000
Residential $692.23 $742.84 $50.61 7.31% $4713 6.82%
$165,000
Commercial $9,343.95 $8,918.88 ($425.07) (4.55 %) ($463.72) (4,96 %)
Industrial
$1M
Value Changes
1) Residential no change
2) Residential 8 % Increase
3) Commercial ( -2 %) Decrease
Other Funds
■ Special Revenue Funds
■ Enterprise Funds
w
. dw
Modw
Special Revenue Funds:
Library
$98,400
Ice Arena
$706,100
Landfill
$105,400
Safety
$37,100
12/02/2014
12
WN mostoci
NW
Enterprise Funds
• Liquor
■ Budgeted to transfer out $656,000
■ Sanitary Sewer
• Proposed rate increase of 3%
• $18M. sewer plant expansion. project
■ Garbage
■ Proposedno rate change
■ Storm Water
■ First year of fund
Budget Summary
Enterprise R Capital Total Exp. &
Funds Revenues Expenditures Outlay Ca ital Outla
Liquor Fund 6,592,550 6,577,500 0 6,577,500
Sewer Fund 6,292,200 2,573,510 10,575,100 13,445,910
Garbage Fund 1,335,350 1,391,750 0 1,391,750
Storm Water 465,900 615,500 360,000 975,500
State Tax Relief Programs
• Homestead Credit Refund — when property taxes exceed
a certain percentage of the household's income.
• Targeting Property Tax Refund — when ahome has
increased by more than 12% over the previous year's tax and if the
increase is v er $100. The max refund is $1,000. (no income
component)
• Senior Citizen Property Tax Deferral Program —
qualifying homeowners over age 65 to defer a portion of their
property taxes into the future
More information at www.revenue.state.mn.us
(search: property tax refuna) or (651) 296 -3781
12/02/2014
13
LZ`z
Public Comment
Request public comment
12/02/2014
14