5.1. SR 09-08-2008REQUEST FOR ACTION
To
Item Number
City Council
5.1.
Agenda Section
Meeting Date
Prepared by
Worksession
Se tember 8, 2008
Lori Johnson, City Administrator
Item Description
Reviewed by
Resolution Authorizing the Proposed Property Tax Levy for
Reviewed by
Collection in 2009
Action Requested
Approve Resolution Authorizing the Proposed Property Tax Levy for Collection in 2009
Background/Discussion
As you know, we have been waiting for a revised estimated net tax capacity (NTC) from the county
assessor before making a decision on the proposed tax levy for 2009. I received an updated estimate on
Thursday along with a decision on how to correct a county error in a tax increment financing (TIF)
district that will also affect the tax levy and tax rate.
Based on an early estimate from the county assessor, we based the tax levy and budget on a NTC increase
of three percent. The new estimate is consistent with the earlier estimate. The NTC is now estimated to
be 2.8 percent excluding military exemptions and personal property additions. The final NTC will change
slightly when these are included; however, the NTC will most likely still be no higher than three percent.
The three percent NTC at the same 2008 tax rate of 42.494 leaves a 2009 General Fund budget shortfall
of $519,850. Unfortunately, the 2008 TIF error resulted in an artificially low tax rate for 2008 because the
TIF value was not subtracted from the taxable NTC. Without the TIF error, the tax rate would have
been 42.712. Levying to the levy limit for 2009 would increase the tax rate to 44.077 and reduce the
budget shortfall to $126,300. To put this in perspective, below is past levy and tax data:
Taxes Payable
Year
NTC
Percent increase
Tax Rate
Total Levy
Percent increase
General Fund Levy
2009*
26,040,206
2.83%
42.494
11,084,248
3.00%
9,426,524
2008
25,324,612
11.75%
42.494
10,761,311
10.29%
9,139,350
Percent increase 3.14% 10.61%
* Estimated NTC; Levy based on 3% NTC increase
2007
22,661,722
12.82%
43.056
9,757,057
10.58%
8,263,032
14.44%
17,421,465
15.29%
43.929
8,823,793
15.74%
7,220,536
20.39%
5:ACouncil\LoaA2008\Budget Discussion 09 08 08.doc
Each $100,000 levied increases the tax rate by .384. If the Council wanted to increase the levy by
$100,000 to help eliminate the budget shortfall, the tax rate would increase to 42.878. That option is
included in the list of possible budget adjustments to be considered by the Council.
As I stated earlier, if the levy is approved based on a three percent NTC increase, there is a $519,850
budget shortfall. The budget requests from department heads were for the most part very conservative
with many departments requesting less than a five percent increase even though a three percent cost of
living adjustment, five percent cafeteria benefit increase, and substantial fuel and supply cost increases
were included. Given the conservative budget proposal, it was more difficult than in the past to identify
budget adjustments that do not affect services. That said, we have identified a list of possible budget
adjustments that is attached. Some of the adjustments are administrative corrections to match the budget
request to actual costs or actual needs. There are also several positions that are currently vacant that may
not be filled immediately that have been included as proposed cuts. No new staff or increased hours are
included in the proposed budget. Most of the suggested cuts are coming from departments that
requested increases in services or that had increases in excess of five percent. The goal in determining
possible cuts was based on retaining existing services; the objective is to continue to provide services at
existing levels without any visible change to the public. As a result, the most obvious areas to cut are
increases in programs and new programs. In addition, at the staff level we have explored every
opportunity to increase our efficiency and reevaluate how we do our jobs in an effort to reduce costs,
increase efficiency, and provide excellent service to our residents. I have reviewed the proposed
adjustments with the affected department heads and in many cases they and their staffs have offered
suggestions on possible reductions.
Reducing an already fiscally sound budget is difficult as you can tell by the list of possible adjustments. In
addition, if the Council chooses to include the TIF error in the tax rate of 42.494, an additional $87,210 in
cuts are necessary. Finance Director Tim Simon and I will be prepared to review this information in
detail at the work session. Obviously, many of the proposed budget adjustments will generate Council
discussion and will require difficult decisions to be made by the Council.
Attachments
• 2009 General Fund Budget — List of Possible Adjustments
• Resolution Authorizing the Proposed Property Tax Levy for Collection in 2009
• General Fund budget summary
• Letter from County Auditor Diane Arnold on TIF adjustment
• Minnesota Statute regarding correction of errors for TIF districts
• 2008 year to date General Fund revenue and expenditure summary
Action
Follow
M
Motion by Second by Vote
S:ACouncil\LoriA2008\Budget Discussion 09 08 08.doc
Subtotal of Proposed Adjustments (294,550)
Original Budget Shortfall 519,850
Revised Budget Shortfall 225,300
Other possible adjustments
Do not fill Sr. Planner in 2009 (42,000)
Liquor Store Transfer In 25,000 This would increase the transfer by 21 % over 2008
Use Available 2007 Fund Balance Reserve Reserve was $161,284. Amount available would be reduce
up to $161,284 by any needed to balance 2008 budget
Increase Tax Levy
Decrease COLA
Use General Fund Balance as needed
Notes:
Proposed budget does not include contribution to Boys and Girls Club
2009 General Fund Budget
List of Possible Adjustments
September, 2008
Line Item
Amount
Comments
.ng Mnt - Overtime
($4,000)
Administrative Adjustment/Correction
Park Maint - 4th of July Supplies
(1,200)
Administrative AdjustmenUCorrection
Cable TV
(1,700)
Administrative Adjustment/Correction
Planning
(300)
Administrative Adjustment/Correction
Energy City - Expo
(5,000)
Administrative Adjustment/Correction
Recreation Programming
(10,000)
Administrative AdjustmenUCorrection
Building Safety - Code Enf. Officer
(27,900)
Administrative Adjustment/Correction
Planning - Sr. Planner
(42,000)
Do not fill until July 1, 2009
Fire - Pt. Inspector
(15,300)
Not needed until activity increases
Cable TV - PT assistant
(10,000)
Contract or use less staff time
Energy City - PT Coordinator
(30,500)
Could hire mid year and reduce savings
Streets - Laptop
(5,000)
Use recycled computer from another dept.
Environmental - Fish Stocking Lake Orono
(1,000)
Stocked in several times recently
Administration - Scanning
(8,000)
Delay
Parks - Consulting
(5,000)
No park improvements planned in 2009
Bldg Maint - Repaint Vehicle
(6,000)
Delay
Planning - Plotter
(13,000)
Duplicate for EOC - use existing
Streets - Asphalt heater
(10,650)
Rent instead of purchase
Contingency
(5,000)
Streets - Sign supplies
(7,500)
Still increases 25% over 2008
Streets - Sealcoating
(40,000)
Still increases 10% over 2008
Parks - Ballfield maintenance contract
(8,000)
New request
Recreation Administration
(5,000)
Various minor reductions
Recreation Programming
(5,000)
Various minor reductions
",icreation Programming
(2,500)
Operating Supplies YMCA
-SystemImprovements
(10,000)
Delay
Transfer to Ice Arena
(5,000)
Zamboni Advertising
Recreation Programming
(10,000)
Arts Alliance Contribution
Subtotal of Proposed Adjustments (294,550)
Original Budget Shortfall 519,850
Revised Budget Shortfall 225,300
Other possible adjustments
Do not fill Sr. Planner in 2009 (42,000)
Liquor Store Transfer In 25,000 This would increase the transfer by 21 % over 2008
Use Available 2007 Fund Balance Reserve Reserve was $161,284. Amount available would be reduce
up to $161,284 by any needed to balance 2008 budget
Increase Tax Levy
Decrease COLA
Use General Fund Balance as needed
Notes:
Proposed budget does not include contribution to Boys and Girls Club
RESOLUTION 08 -
A RESOLUTION FOR THE CITY OF ELK RIVER
A RESOLUTION AUTHORIZING THE PROPOSED PROPERTY TAX LEVY
FOR COLLECTION IN 2009
WHEREAS, the Elk River City Council has reviewed the City's anticipated
expenditures for all funds in 2009; and,
WHEREAS, the Elk River City Council has considered projected revenues for
all funds in 2009; 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 2009:
Levy
General Fund
$ 9,349,609
PERA Employer Rate Increase
76,915
Library
85,400
Surface Water Management
50,000
City Special Assessments
17,356
1994 Storm Sewer Bonds
116,645
2005 Improvement Bonds
88,400
2007 Improvement Bonds
121,748
2007 Certificate of Indebtedness
110,644
2006 Certificate of Indebtedness
92,465
2005 Certificate of Indebtedness
149,612
Public Safety Lease Revenue Bonds
603,254
Economic Development Tax Abatement
222,200
TOTAL
$11,084,248
Passed and adopted by the City Council of the City of Elk River this 8th
day of September, 2008.
Stephanie Klinzing, Mayor
ATTEST:
Tina Allard, City Clerk
APPROPRIATIONS SUMMARY
SOURCE OF FUNDS - GENERAL FUND=
2007
2008
2009
% of
%
$$
2008
ACTUAL
2006
2007
2008
2009
Change
Increase
ACTUAL
ACTUAL
ADOPTED
PROPOSED
%Increase
TAXES
$ 6,967,985 111
7,946,017
111 9,189,350 '
$ 9,576,500
4.21%
INTERGOVERNMENTAL REVENUES 1,314,482
1,323,874
976,900
983,600
0.69%
CHARGES FOR SERVICES
835,804
740,197
756,950
608,800
-20.62%
FINES AND FORFEITS
150,402
148,904
180,000
157,000
-1.88%
LICENSES & PERMITS
1,207,369
987,711
676,250
353,550
-47.72%
OTHER REVENUES
275,303
318,713
251,000
260,000
3.59%
TRANSFERS
442,186
451,303
473,000
599,600
26.77%
TOTAL
$ 11,193,531 $
11,916,719
$ 12,493,450
$ 12,539,050
0.36%
`= Market value credit is included in the
2008 & 2009 as part of the Taxes amount and when received is recorded as intergovernmental revenues.
0.336%
APPROPRIATIONS SUMMARY
2006
2007
2008
2009
% of
%
$$
2008
ACTUAL
AMENDED
ADOPTED
PROPOSED
Total
Change
Increase
%of Total
General Government
MAYOR & COUNCIL $
168,321 $
210,150 $
221,100
$ 168,100
1.29%
-23.97% $
(53,000)
1.77%
CABLE TV
81,104
92,400
99,250
93,500
0.72%
-5.79% $
(5,750)
0.79%
ADMINISTRATION
416,012
439,250
457,750
481,150
3.58%
5.11% $
23,400
3.56%
HUMAN RESOURCES
-
83,500
156,900
149,450
1.14%
-4.75% $
(7,450)
1.26%
ELECTIONS
30,169
-
40,850
-
0.00%
-100.00% $
(40,850)
0.336%
FINANCE
415,880
450,050
434,450
453,300
3.47%
4.34% $
18,850
3.48%
INFORMATION TECHNOLOGY
225,246
237,350
256,250
288,050
2.21%
12.41% $
31,800
2.05%
LEGAL
229,110
249,850
234,700
234,000
1.79%
-0.30% $
(700)
1.88%
COMMUNITY DEVELOPMENT
-
170,300
158,550
178,900
1.37%
12.84% $
20,350
1.27%
PLANNING
375,651
294,450
328,450
419,000
3.21%
27.57% $
90,550
2.63%
BUILDING MAINTENANCE
235;625
245,150
300,000
300,300
2.30%
0.10% $
300
2.40%
CONTINGENCY
17,305
14,000
60,000
65,000
0.50%
8.33% $
5,000
0.48%
ENERGY CITY
32,826
42,300
93,350
91,300
0.70%
.2.20% $
(2,050)
0.75%
General Government
2,227,249
2,528,750
2,841,600
2,922,050
22.38%
2.83% $
80,450
22.74%
Public Safety
POLICE
3,675,270
3,797,250
4,192,050
4,311,100
33.01%
2.84% $
119,050
33.55%
FIRE
631,151
666,300
639,250
682,700
5.23%
6.80% $
43,450
5.12%
EMERGENCY MANAGEMENT
37,346
44,700
52,300
49,150
0.38%
-6.02% S
(3,150)
0.42%
BUILDING & ENVIRONMENTAL
768,679
698,900
807,750
684,250
5.24%
-15.29% $
(123,500)
6.47%
ENVIRONMENTAL
-
88,050
87,150
93,000
0.71%
6.71% $
5,850
0.70%
Public Safety
5,113,446
5,295,200
5,778,500
5,820,200
44.57%
0.72% $
41,700
46.25%
Public Works
STREETS
1,096,473
1,292,650
1,196,450
1,452,200
11.12%
21.38% $
255,750
9.58%
SNOW REMOVAL
149,463
304,550
301,600
308,750
2.36%
2.37% $
7,150
2.41%
EQUIPMENT SERVICES
223,937
235,700
280,800
256,650
1.97%
-8.60% $
(24,150)
2.25%
ENGINEERING
114,030
209,100
174,550
191,300
1.46%
9.50% $
16,750
1.40%
Public Works
1,583,903
2,042,000
1,953,400
2,208,900
16.91%
13.08% $
255,500
15.64%
Culture & Recreation
PARK MAINTENANCE
608,362
678,150
668,350
808,900
6.19%
21.03% $
140,550
5.35%
RECREATION
645,277
743,400
781,850
820,100
6.28%
4.B9% $
38,250
6.26%
SR. CITIZEN PROGRAMS
111,774
165,900
201,300
195,050
1.49%
-3.10% $
(6,250)
1.61%
Culture & Recreation
1,365,413
1,587,450
1,651,500
1,824,050
13.97%
10.45% $
172,550
13.22%
TRANSFERS
688,518
194,600
268,450
283,700
` 2.17%
5.88% $
15,250
2.15%
TOTAL $
10,978,529 $
11,648,000 11
12,493,450
$ 13,058,900
100.00%
4.53% $
565,450
100.00%
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Sherburne County
AUDITOR/TREASURER
DIANE ARNOLD
13880 Business CenterDrive
Elk River, MN 55330-4601
763-241-2861111-800-438-05760 Fax: 763-241-2869
Web: www.co.sherburnamn.us
September 3, 2008
LoriJohnson
City of Elk River Administrator
13065 Orono Parkway
Elk River, MN 55330
Dear Lori:
RE: TIF District 22
Based upon the information we received on August 28`h, 2008 from Mr. Jason Nord with the
Department of Revenue and according to M.S. 469.177 subdivision 13.
For the correction of error on TIF 22 for assessment 2007 pay 2008, the TIF District 22 will
be corrected with the assessment 2008 pay 2009. Sherburne County Auditor will be utilizing
option number four (4) to adjust the tax rates of one or more of the taxing districts imposing
taxes in the tax increments financing district for one year to recoup amounts advanced by the
county to replace the reduced increments in the previous year.
We will be adding together the city, HRA and development district amounts together for a
single city correction amount and the county and RR authority amounts for a single county
adjustment, the school dist. 728 amount is not combined with any other district as noted in
Jason's e-mail that was forwarded to you.
In speaking with Jason Nord, since the error was done in one year, it should be recouped in
one year. I will be notifying school dist. 728 of this, as it does involve them as well.
Sincerely,
Diane Arnold
Sherburne County Auditor/Treasurer
cc: Brian Bensen — County Administrator
Lucy Botzek — County Deputy Administrator
Sue Richards — Property Tax Manager/Deputy Auditor/Treasurer
Tim Simon — Finance Director, City of Elk River
Jason Nord — Department of Revenue
Michelle Vargas — Manager of Finance School Dist. 728
Chapter 366 - Revisor of Statutes
Sec. 12. Minnesota Statutes 2006, section 469.177, is amended by adding a subdivision
to read:
Subd. 13. Correction of errors. (a) If the county auditor, as a result of an error
or mistake, decertifies a district fails to certify a district incorrectly certifies a district
or otherwise fails to correctly compute the amount of increment the county auditor may
undertake one or more of the following actions to correct the error or mistake:
(1) certify the original tax capacity of the affected Qarcels at the appropriate value
for a later taxes pavable year and extend the duration of the district in whole or in part,
to co=gnate:
(2) recertify the affected parcels and extend duration of the district in whole or in
part to com ensate;
(3) recertify or correct the original tax capacity rate for the district
(4) adjust the tax rates of one or more of the taxing districts imposing taxes in the tax
increment financing districts for one or more years to recoup amounts advanced by the
county or other entitxto the authority to replace the reduced increments,• or
(5) take other appropriate action so that the amount of increment compensates for or
offsets the error or mistake and correctly reflects application of the law.
(b) At least 30 days before exercisingauthority uthoriunder this subdivision the county
auditor must notify the authority and the mupicipality in writing of the intent to do so
including supporting information to describe reason for the proposed action The authority
and municipality may waive the time requirement of this parag_raph If the city or the
authority objects before expiration of the 30-dU period the matter must be submitted to
the commissioner of revenue for a decision or resolution of the dispute The commissioner
of revenue shall consult with the Office of the State Auditor before making a decision.
(c) The county auditor must notify the commissioner of revenue and the Office
of the State Auditor of corrections made under this subdivision. The notification must
be made in the form and manner and at the time prescribed by the commissioner. The
commissioner shall incorporate the corrections in the tax increment financing district tax
list supplement as appropriate.
EFFECTIVE DATE.This section is effective the day following final enactment
and applies to all tax increment financing districts. regardless of when the request for
certification was made or when the error occurred.
Page
https://www.revisor.leg.state.=.us/laws/?id=366&year=2008&type=0 6/=
MEMORANDUM
TO: Mayor and City Council
FROM: Tim Simon, Finance Director
DATE: September 4, 2008
SUBJECT: 2008 General Fund (through August 31, 2008)
The General Fund is where most City services are budgeted. These services include
administration, parks and recreation, community development, police, fire e.g. The majority
of the funding for these services is through property taxes. Other sources of funding are
permits and licenses, charges for services, intergovernmental funding, fines and forfeitures,
interest earnings, and transfers from other funds for services provided.
Revenues.
License and permit revenues are approximately $461,000 lower as compared to last year.
The majority of this variance is due to lower permit revenue of approximately $442,000.
Permit revenue has slowed in 2008 year-to-date, staff hopes revenues will increase with a few
additional commercial projects coming in the next couple of months. Tax settlements are
primarily received in July and December of each year.
Intergovernmental revenue is behind projections primarily due to the timing of the actual
receipt of funds. The majority of state aid funding is received in the second half of the year.
Fines, Fees, & Forfeit revenue are down primarily due to court fines revenue being down
over the prior year.
Expenditures.
Expenditures for the first eight months are in line with what was budgeted. The figures
below show some functional areas behind budget due to the fact of the timing of capital
outlay purchases and seasonal personnel costs. Overall the departments are working
together to help offset the shortfalls that may exist in the revenues. The transfers out will be
made at year-end once pinewood and ice arena's financial are complete.
CITY OF ELK RIVER
GENERAL FUND REVENUE AND EXPENDITURES
For the Month Ended August 31, 2008 (Unaudited)
Expenditures
66% of year Comp.
General Government
2008
54.11%
$ 2,748,250„
% of
3,447,324
Revenue
08/31/2008
Budget
Total Budget
Property Taxes
$ 4,430,932
48.22%
$ 9,189,350
Licenses and Permits
308,343
45.60%
676,250
Intergovernmental
410,747
42.05%
976,900
Charges for Services
518,487
68.03%
762,150
Fines, Fees, & Forfeit
81,982
51.24%
160,000
Other Revenue
122,518
47.90%
255,800
Transfers
438,000
92.60%
473,000
Total Revenue
$ 6,311,009
50.51%
$ 12,493,450
Expenditures
General Government
$ 1,487,111
54.11%
$ 2,748,250„
Public Safety
3,447,324
59.66%
5,778,500+
Public Works
1,131,015
57.90%
1,953,400
Culture & Recreation
1,045,859
63.33%
1,651,500
Energy City
35,669
38.21%
93,350
Transfers
66,600
24.81%
268,450
Total Expenditures
$ 7,213,578
57.74%
$ 12,493,450
4,026,474
769,577
411,043
606,500
96,153
173,005
11504,998
3,236,505
1,148, 884
1,047,176
18,508