10.4. SR 07-06-2015 Eclty1� ,.,�� Request for Action
River
To Item Number
Mayor and City Council 10.4
Agenda Section Meeting Date Prepared by
Worksession July 6, 2015 Tim Simon, Finance Director
Item Description Reviewed by
2016 Budget Discussion Cal Portner, City Administrator
Reviewed by
Action Requested
Discuss 2016 budget process and provide feedback.
Background/Discussion
Staff has begun developing the preliminary 2016 budget which includes meetings with department
directors and/or division managers after the preliminary budget requests are compiled.
This Work Session will begin the budget review with the 2016 tax levy and budget parameters and
culminates with the adoption of the maximum tax levy prior to September 30, 2015. A state law change
now allows for the maximum general levy approval on or before September 30,however the EDA and
HRA levies are still required on or before September 15. The final budget will be adopted in December.
The majority of the budgets will be discussed at meetings in July and August.
Proposed Budget Timeline (summary)
■ July 6 Council Work Session—General 2016 budget discussion and process.
■ July&August Work Sessions —Presentation of proposed budget&goals to Council with
department directors and division managers in attendance.
■ September 7 Regular Meeting—Approve maximum tax levy.
■ September 14—Presentation of proposed Enterprise Fund budgets.
■ October& November—Continue budget, Capital Improvement Plan and tax levy
discussion.
■ December 7 Regular Meeting—Present final proposed budget; take additional public input;
adopt final budget and tax levy.
Levy Limits
There are no levy limits for 2016.
Consumer Price Index (CPI)
The Midwest Region CPI is currently trending up at about 0.86%, as of May over the end of last year.
Change in Net Tax Capacity
Last year, the city Net Tax Capacity (NTC) increased 4.96% after several years of decreases. The
Assistant County Administrator estimates 4-4.5% NTC increase for taxes payable in 2016. He indicated
residential values increased approximately 6%, commercial/industrial values held the same or decreased
POWERED 6T
Template Updoted 4/14 INAMIRE1
2% or slightly more, and apartments increased about 4%. Based on the different tax capacity rates each
property types (1% Res. vs. 1.5-2% C/I) the NTC percentage is adjusted. This will likely change as more
accurate estimates are available before the final levy is adopted. The county is still waiting on state utility
assessment values. For planning purposes we will use a 4.5% NTC to begin the budget process.
Pay and Benefits
Both labor contracts expire on December 31, 2015, and negotiations will open this fall. Place holders will
be added for nonunion staff pay and benefits.
State Aid
We are expected to receive Local Government Aid (LGA) although we have not yet received certified
amounts. The amount is expected to be similar to 2015 at$225,894. We propose to continue budgeting
LGA in the Equipment Replacement Fund with the offsetting amount from ERMU (transfer-in) in the
General Fund. As you may recall, the transfer from ERMU is allocated to the General Fund and
Equipment Replacement Fund. If LGA is eliminated or reduced, as in the past,it is easier to adjust our
equipment needs and reprioritize replacements versus immediate General Fund operational changes.
Transfer In
Transfers are made each year to the General Fund from the Waste Water,Liquor, Storm Water, Garbage,
EDA and HRA funds to cover costs associated with providing services to those funds. We will review
the transfers to ensure they cover services used. The exception is the Liquor Fund transfer,which is
significantly higher to offset other operating expenditures.
Levels of Service
The preliminary budget will be drafted based on continuing the same level of service as in 2015.
Estimated General Fund Revenues
Most revenue line items are stable and consistent with last year. We continue to monitor building activity
and revenue and will make adjustments as we get updates on newly planned 2016 building activities.
Tax Lew
The city administrator will propose a balanced budget. At this point we should just have some general
discussions about the tax levy expectations as other revenues are relatively consistent and programmed
conservatively.
Other Items
• Fuel price per gallon will start at$3.00—we intend to use state contract pricing.
• Council Contingency—We anticipate using a 0.5-1% employee vacancy rate.
Financial Impact
N/A
Attachments
■ 2016 budget schedule
N:APublic Bodies\Agenda Packets\07-06-2015\Final\x10.4 Budgetmemo 0706.docx
City of Elk River
2016 Budget Schedule
May 4, 2015 Budget forms and instructions to department directors
June 1, 2015 Department Director proposed budgets due to finance department
June 2015 Staff budget meetings with City Administrator and Finance Director
July 6, 2015 General budget discussion on tax levy,goals, staffing and other
Policy items.
July 20, 2015 Presentation of Community Development and Operations (Planning,
COD, Environmental, Energy City, Landfill), Finance,Information
Technology, and Building Maintenance budgets to Council
August 3, 2015 Presentation of Administration, Cable TV,Mayor& Council,
Elections,Legal, Human Resources, Streets, Snow Removal,
Equipment Maintenance,Parks Maintenance and Library budgets to
Council
August 10, 2015 Presentation of Police, Engineering, and Equipment Replacement
Fund (fleet committee to attend) budgets to Council
August 17, 2015 Presentation of Parks and Recreation, Fire and Building Safety
budgets to Council
September 14, 2015 Presentation of the Liquor, Garbage, Storm Water and Wastewater
budgets
September 21, 2015 Council adopts maximum property tax levy
September 30, 2015 Certify city maximum property tax levy to Sherburne County
October/November 2015 Final adjustments/budget revisions and review Capital Improvement
Plan (CIP) funds/projects
December 7, 2015 City Council adopts the final 2016 budget and property tax levy
December 21, 2015 City Council adopts the 2016-2020 CIP