10.2. SR 06-05-2017Request for Action
To Item Number
Mayor and City Council 10.2
Agenda Section Meeting Date Prepared by
Worksession June 5, 2017 Lori Ziemer, Finance Director
Item Description Reviewed by
2018 Budget Discussion Cal Portner, City Administrator
Reviewed by
Action Requested
Discuss 2018 budget process and provide feedback.
Background/Discussion
Staff has begun developing their preliminary 2018 budgets and budget meetings will soon be scheduled
with department directors and/or division managers to review their preliminary budget requests. At this
work session we will begin discussing the 2018 tax levy and budget parameters. All of this leads up to the
Council adopting a maximum tax levy prior to September 30, 2017. The levy certification deadline for
the EDA & HRA is proposed to change from September 15 to September 30. The final budget will not
be adopted until December. Most of the budgets will be discussed at meetings in July and August.
Proposed Budget Timeline (summary)
June 5 Council Work Session – General 2018 budget discussion and process.
July & August Work Sessions – Presentation to council of proposed budget & goals.
August 21 Regular Meeting – Presentation of proposed enterprise fund budgets.
September 18 Regular Meeting – Approve maximum tax levy.
October & November – Continue budget, Capital Improvement Plan and tax levy discussion.
December 4 regular meeting – Present final proposed budget; take additional public input; adopt
final budget and tax levy.
Consumer Price Index (CPI)
The CPI for the Midwest region went up 1.8% from April 2016 to April 2017, with motor fuel prices
rising 14.6% over the year.
Change in Net Tax Capacity
Last year the Net Tax Capacity (NTC) for the city increased 3.8%, consistent with the last few years.
Early spring estimates for 2017 indicate residential values increasing about 5.7%, commercial/industrial
decreasing .6%, and apartments increasing about 7%. Until updates are available from the county, we will
use a 3.5-4% increase in NTC as we begin the budget process.
Pay and Benefits
Pay and benefits will follow other labor agreements with cost of living adjustments. The 49ers labor
agreement is effective until December 31, 2017.
State Aid
If the proposed tax bill is approved, the estimated Local Government Aid (LGA) we can expect to
receive in 2018 is about $324,000. The LGA is budgeted in the Equipment Replacement Fund which
makes it easier to adjust and reprioritize equipment needs versus immediate General Fund operational
changes should LGA be eliminated or reduced. The transfer from ERMU is allocated to the General
Fund and Equipment Replacement Fund.
The city receives state aid that is apportioned for the fire relief association. In the past, the city has netted
in the General Fund the revenue received from the state with the payment to the fire relief association,
resulting in a net effect of zero. The correct reporting standard is to recognize the fire state aid as
revenue and the payment to the fire relief association as expenditure in the General Fund. So for 2018,
we will be budgeting for the fire state aid revenue with an offsetting expenditure in the fire department
for payment to the fire relief association.
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 internal 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 2017.
Estimated General Fund Revenue
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 2018 building activities.
Tax Levy
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 $2.50 – we intend to use state contract pricing again for 2018.
The tax abatement levy will decrease approximately $30,000 due to three tax abatement
agreements ending in 2017.
Financial Impact
N/A
Attachments
2018 budget schedule
City of Elk River
2018 Budget Schedule
May 8, 2017 Budget forms and instructions to department directors
June 5, 2017 Department Director proposed budgets due to finance department
June 5, 2017 General budget discussion on tax levy, goals, staffing and other
policy items.
June 2017 Staff budget meetings with City Administrator and Finance Director
July 17, 2017 Presentation of Mayor & Council, Cable TV, Administration,
Elections, Legal, Human Resources, Finance, Information
Technology, and Building Maintenance budgets to Council
August 7, 2017 Presentation of Community Development and Operations (Planning,
COD, Environmental, Energy City, Landfill), Engineering, Streets,
Snow Removal, Equipment Maintenance, Parks and Recreation, and
Library budgets to Council
August 14, 2017 Presentation of Police, Fire, Building Safety, Code Enforcement, and
Equipment Replacement Fund (Fleet Committee to attend) budgets
to Council
August 21, 2017 Presentation of Liquor, Garbage, Storm Water, and Wastewater
budgets to Council
September 5, 2017 Council adopts EDA/HRA levies
September 11, 2017 Budget review and any remaining budget presentations
September 18, 2017 Council adopts maximum property tax levy
September 29, 2017 Certify city maximum property tax levy to Sherburne County
October/November 2017 Final adjustments/budget revisions and review Capital Improvement
Plan (CIP) funds/projects
December 4, 2017 City Council adopts the final 2018 budget and property tax levy
December 18, 2017 City Council adopts the 2017-2021 CIP