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10.6. SR 11-06-2017City of Elk - River Request for Action To Item Number Mayor and City Council 10.6 Agenda Section Meeting Date Prepared by Work Session November 6, 2017 Lori Ziemer, Finance Director Item Description Reviewed by 2018 Budget Cal Portner, City Administrator Reviewed by Action Requested Continue 2018 budget discussion. Background/Discussion Over the past several months staff has presented budget requests and related goals for each department. On September 18, Council approved a maximum levy of $11,123,030, which is a 5.3% change from the 2017 levy. Since then, staff has reviewed and made further adjustments to bring the levy to $11,063,830, a change of 4.7%. Pending any final adjustments from the county on property values, the city tax rate is projected to decrease from 46.193 to 45.925 for 2018. Financial Impact N/A Attachments General Fund summary Tax levy breakout The Elk River Vision A avelcoming community avith revolutionary and spirited resourcefulness, exceptional p o w E A E u e r service, and community engagement that encourages and inspires prosperity ,� g /� General Fund Revenues: Property taxes Othertaxes Licenses & Permits Intergovernmental Revenues Charges for Services Fines Other Revenues Transfers In Total General Revenues General Fund Expenditures General Government: Mayor & Council Communications Administrative Services Human Resources Elections Finance Information Technology Legal Community Development Planning Building Maintenance Energy City Contingency - 49'ers Union Total General Government Public Safety: Police Fire Code Enforcement 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 Total General Fund Expenditures CITY OF ELK RIVER GENERAL FUND BUDGET 2017 2018 % of % Budget Final Budget Budget Change $9,969,250 $10,497,800 68.9% 5.3% 140,000 150,000 1.0% 7.1% 714,950 877,900 5.8% 22.8% 293,500 324,500 2.1% 10.6% 891,400 937,900 6.2% 5.2% 155,000 151,000 1.0% -2.6% 217,500 226,500 1.5% 4.1% 1,996,800 2,063,950 13.6% 3.4% 14,378,400 15,229,550 100.0% 5.9% 148,800 155,300 1.0% 4.4% 111,300 306,900 2.0% 175.7% 594,450 511,900 3.4% -13.9% 234,450 250,550 1.6% 6.9% 6,600 42,250 0.3% 540.2% 572,200 586,250 3.8% 2.5% 385,100 431,300 2.8% 12.0% 220,000 230,000 1.5% 4.5% 223,400 150,050 1.0% -32.8% 297,450 405,800 2.7% 36.4% 638,850 668,250 4.4% 4.6% 33,800 33,000 0.2% -2.4% - 53,450 0.4% - 3,466,400 3,825,000 25.1% 10.3% 5,142,250 5,470,050 35.9% 6.4% 908,550 955,000 6.3% 5.1% 93,650 98,750 0.6% 5.4% 665,300 678,450 4.5% 2.0% 47,000 48,400 0.3% 3.0% 6,856,750 7,250,650 47.6% 5.7% 1,304,800 1,333,250 8.8% 2.2% 305,950 298,700 2.0% -2.4% 196,050 205,650 1.4% 4.9% 218,500 234,200 1.5% 7.2% 2,025,300 2,071,800 13.6% 2.3% 1,047,950 1,103,800 7.2% 5.3% 732,400 726,800 4.8% -0.8% 249,600 251,500 1.7% 0.8% 2,029,950 2,082,100 13.7% 2.6% 14,378,400 1 15,229,550 1 100.0% 5.9% City of Elk River Levied Preliminary Final Tax Levy Pay 2017 Pay 2018 Pay 2018 General Fund $9,969,250 $10,557,000 $10,497,800 Library 53,650 54,000 54,000 10,022,900 10,611,000 10,551,800 General Property Tax Levy Special Levies: 2010 GO CIP Bonds 368,030 369,500 369,500 Economic Development Tax Abatement 172,840 142,530 142,530 10,563,770 11,123,030 11,063,830 Total Levy General Fund Change from Previous Year 587,750 528,550 Percentage Change from Previous Year 5.9% 5.3% Total Dollar Change from Previous Year 559,260 500,060 5.3%1 4.7% Change Note: This will be adjusted as we go thru the budget process and do updates. Adjustments: Revenues: Police 2% Aid School Liaison Expenditures: Liability insurance - various depts. Supplies - various depts. Personnel services - Administration NTC Value $22,868,723 Tax Rate 46.193 101-0000-3325 101-00003432 Revenue Additions 101-XXXX-4361 101-XXXX-4219 101-1210-41XX Expenditure Reductions Tax Levy Reduction $24,090,997 $24,090,997 46.171 45.925 (30,000) (6,400) (36,400) (7,500) (5,300) (10,000) (22,800) (59,200) City of Elk River Levied Preliminary Final Tax Levy Pay 2017 Pay 2018 Pay 2018 General Fund $9,969,250 $10,557,000 $10,497,800 Library 53,650 54,000 54,000 10,022,900 10,611,000 10,551,800 General Property Tax Levy Special Levies: 2010 GO CIP Bonds 368,030 369,500 369,500 Economic Development Tax Abatement 172,840 142,530 142,530 10,563,770 11,123,030 11,063,830 Total Levy General Fund Change from Previous Year 587,750 528,550 Percentage Change from Previous Year 5.9% 5.3% Total Dollar Change from Previous Year 559,260 500,060 5.3%1 4.7% Change NTC Value $22,868,723 $24,090,997 $24,090,997 Tax Rate 46.193 46.171 45.925 -0.58% 2018 General Fund Summary Property Taxes OtherTaxes Licenses & Permits Intergovernmental Revenues Charges for Services Fines Other Revenues Transfers In Total Revenues Expenditures: Personal Services Supplies Other Services & Charges Capital Outlay Total Expenditures 2017 2018 Budget Preliminary Change 9,969,250 10, 497, 800 5.3 140,000 150,000 7.1 714,950 877,900 22.8% 293,500 324,500 10.6 891,400 937,900 5.2 155,000 151,000 -2.6% 217,500 226,500 4.1% 1,996,800 2,063,950 3.4% 14,378,400 15,229,550 5.9% 10,967,200 11,586,450 5.7% 1,048,050 1,138,950 8.7% 2,363,150 2,489,150 5.3 - 15,000 - 14,378,400 15,229,550 5.9% General Fund Revenues by Category Other Revenues, Transfers In, $226,500 $2,063,950 Fines, $151,000^ \ Charges for Services, $937,900 Intergovtl Revenue, $324,500 I Licenses/Permits $877,900 Other Taxes, $150,00 Property Taxes, $10,497,800 General Fund Expenditures by Category Capital Outlay Services & Charges $15,000 $2,489,150 Supplies $1,138,950 Personal Services $11,586,450 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $ 2,000,000 $0 General Fund Budget 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Reasons for Levy Increase: ➢ New positions added — accounts for 2% of levy increase ➢ Sr. Communications Coordinator ➢ Patrol Officers - 2 ➢ Temp. Planning Scanner ➢ Wage and benefit increases — 2.5% COLA, step increases, insurances ➢ Elections - $35,650 ➢ Software maintenance/ubgrades ➢ Fuel costs ➢ Canine replacement Tax Capacity, Tax Levy and Tax Rate $30,000,000 - 52.000 $25,000,000 — 50.000 Tax Rate 48.000 $20,000,000 46.000 Tax Rate $15,000,000 Tax Capacity 44.000 Tax Levy $10,000,000 42.000 $5,000,000 40.000 $0 38.000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ESTIMATED TAX IMPACT ,� Median Value Residential (Homestead): Commercial/Industrial: Tax Capacity Rate Estimated 46.193 45.925 Total Estimated Tax 2017 2018 Property Value Value Change Tax Capacity Dollar change Percent change 2017 2018 2017 2018 153,000 163,700 6.99% 1,295 1,412 598 648 50 8.4% 172,600 182,200 5.56% 1,509 1,614 697 741 44 6.3% 262,300 272,500 3.89% 2,487 2,598 1,149 1,193 44 3.8% 170,400 181,000 6.22% 1,485 1,601 686 735 49 7.1% 311,700 323,600 3.82% 3,025 3,155 1,397 1,449 52 3.7% 221,300 234,600 6.01% 2,040 2,185 942 1,003 61 6.5% 200,000 200,000 0.00% 1,808 1,808 835 830 (5) -0.6% 196,500 208,400 6.06% 1,769 1,899 817 872 55 6.7% Commercial/Industrial: Tax Capacity Rate 46.193 45.925 Property Value Value Change Tax Capacity Dollar change Percent change Total Estimated Tax 2017 2018 2017 2018 2017 2018 4,545,300 4,449,500 -2.11% 90,156 88,240 41,646 40,524 (1,122) -2.7% 4,176,900 4,032,300 -3.46% 82,788 79,896 38,242 36,692 (1,550) -4.1% 1,575,700 1,577,800 0.13% 30,764 30,806 14,211 14,148 (63) -0.4% 1,246,900 1,193,300 -4.30% 24,188 23,116 11,173 10,616 557 -5.0% SAC Fee Discussion ■ Sewer system is funded by: ■ User charges — cover operating costs ■ SAC fees — new connections used to fund capital improvements and plant expansions ■ Financial goals for sewer system: ■ Ensure collections of fees fully fund operations ■ Modest yearly rate increases keep system financially healthy ■ Minimize financial risk ■ Make sure growth pays for improvements ■ Use cash instead of debt City of Elk — - River Operating Revenues Usage Fee Other Total Operating Revenues Operating Expenses (including depreciation) Personal Services Supplies Depreciation Other Services & Charges Total Operating Expenses Net Operations (including depreciation) Non-operating revenues (expenses) Connection Charges Investment income Other income (expense) Total non operating revenue (expenses) Sewer Fund Actual Budget Budget I Estimate 2015 2016 2017 2018 1 2019 2020 2021 2022 2023 1,812,117 1,917,991 1,915,000 2,020,000 2,161,245 2,273,929 2,391,429 2,516,744 2,648,244 6,359 3,199 4,000 102,000 2,000 2,000 2,000 2,000 2,000 1,818,476 1,921,190 1,919,000 2,122,000 2,163,245 2,275,929 2,393,429 2,518,744 2,650,244 453,554 581,334 550,800 640,500 653,310 666,376 679,704 693,298 707,164 108,816 114,855 206,800 195,000 204,750 214,988 225,737 237,024 248,875 1,017,240 983,689 1,425,000 1,425,000 ' 1,425,000 ' 1,425,000 ' 1,425,000 ' 1,425,000 ' 1,425,000 461,914 532,855 552,000 626,950 658,298 691,212 725,773 762,062 800,165 2,041,524 2,212,733 2,734,600 2,887,450 2,941,358 2,997,576 3,056,214 3,117,383 3,181,203 (223,048) (291,543) (815,600) (765,450) (778,112) (721,647) (662,784) (598,639) (530,959) 748,936 587,300 90,135 48,005 1,718,360 663,356 2,557,431 1,298,661 500,000 500,000 515,000 530,450 546,364 562,754 579,637 80,000 80,000 41,906 43,084 45,217 48,360 52,612 580,000 580,000 556,906 573,534 591,580 61 1,1 14 632,249 Cash Available for Capital Outlay Net operations including depreciation (223,048) (291,543) (815,600) (765,450) (778,112) (721,647) (662,784) (598,639) (530,959) Add non operating revenues 2,557,431 1,298,661 580,000 580,000 556,906 573,534 591,580 611,114 632,249 Add back depreciation 1,017,240 983,689 1,425,000 1,425,000 1,425,000 1,425,000 1,425,000 1,425,000 1,425,000 Other Reconciliations to income (325,539) 197,942 Transfers In (out) 880,000 (119,255) (130,000) (150,000) (157,500) (165,375) (173,644) (182,326) (191,442) Total Cash Available for Capital Outlay 3,906,084 2,069,494 1,059,400 1,089,550 1,046,294 1,111,512 1,180,152 1,255,149 1,334,847 Cashflows from Capital Activities Capital (from CIP and Operating Budgets) (10,820,930) (4,466,806) (1,750,500) (366,250) (300,0007 (300,000) (300,000) (300,000) (300,000) Debt (P&I)-2014 Bonds (20 Yr Term at 2.96% (261,499) (672,405) (669,355) (671,155) (667,805) (669,305) (670,605) (671,705) (666,518) Total Cashflow from Capital Activities (11,082,429) (5,139,211) (2,419,855) (1,037,405) (967,805) (969,305) (970,605) (971,705) (966,518) Cash Flow (7,176,345) (3,069,717) (1,360,455) 52,145 78,489 142,207 209,547 283,444 368,330 Beginning Cash 14,348,133 7,171,788 4,102,071 2,741,616 2,793,761 2,872,250 3,014,457 3,224,004 3,507,449 Ending Cash balance 7,171,788 4,102, 071 2,741, 616 2,793,761 2,872,250 3,014,457 3,224, 004 3,507,449 3,875,779 Target cash reserve amount (note 1) 1,693,167 1,775,722 Total Cash Available 5,478,621 2,326,350 Capital outlay coverage 0.35 0.40 Note1: Target cash reserve equals 6 mos of operating expenses, plus 100% of next years debt 2,038,455 2,111,530 703,161 682,231 0.44 1.05 2,139,984 2,169,393 2,199,812 2,225,209 2,255,619 732,266 845,064 1,024,193 1,282, 240 1,620,160 1.08 1.15 1.22 1.29 1.38 2015 2016 2017 2018 2019 2020 2021 2022 2023 Rate Increase 3.00% 3.00% 3.00% 3.001/6 3.00% 3.00% 3.00% 3.00% 3.00% Connection Charge Increase 3.00% 3.00% 3.00% 3.001/6 3.00% 3.00% 3.00% 3.00% 3.00% SAC Fees $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 OW O°) ti� �� �ti �� �11� ,y0 ,LO ,y0 ,y0 ,y0 ,y0 ,LO ,y0 ,LO ,y0 ,y0 Sewer Fund Operating Cash Reserves $10,000,000.00 $8,000,000.00 $6,000,000.00 $4,000,000.00 $2,000,000.00 $0.00 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20261 oTarget Working Capital