10.7. SR 05-06-2019
Tax Payable Year20192018201720162015
Tax Rate45.907%46.011%46.193%46.170%47.190%
Taxable Net Tax Capacity$26,006,616$24,046,382$22,868,723$22,031,258$21,227,938
% Increase in NTC8.15%5.15%3.80%3.78%4.58%
Tax Levy$11,938,765$11,063,830$10,563,770$10,171,733$10,017,357
% Increase in Levy7.9%4.7%3.9%1.5%1.7%
General Fund Budget$16,221,200$15,456,550$14,594,400$13,884,800$13,433,200
% Increase in GF Budget4.9%5.9%5.1%3.4%3.9%
Request for Action
To Item Number
Mayor and City Council 10.7
Agenda Section Meeting Date Prepared by
Work Session May 6, 2019 Lori Ziemer, Finance Director
Item Description Reviewed by
2020 Budget Discussion Cal Portner, City Administrator
Reviewed by
Action Requested
Discuss 2020 budget process and provide feedback.
Background/Discussion
Staff will begin developing their preliminary 2020 budgets and budget meetings will be scheduled in
June/July with department directors and/or division managers to review their preliminary budget request.
All of this leads up to the Council adopting a maximum tax levy prior to September 30 and the final budget
being adopted in December.
Proposed Budget Schedule
May 6 Council Worksession – General 2020 budget discussion and process.
July/August Budget Worksessions – Suggested Council budget worksession dates are as follows:
st
o 1 Budget Worksession – Monday, July 22
nd
o 2 Budget Worksession – Monday, July 29
o Additional Worksession (if needed) – Monday, August 12
September 3 Regular Meeting – Approve maximum tax levy.
October/November – Continue budget, Capital Improvement Plan and tax levy discussion.
December 2 Regular Meeting – Present and adopt final budget and tax levy.
Change in Net Tax Capacity
Early spring estimates from the county indicate residential market values increasing approximately 6.8% and
commercial/industrial values increasing slightly over 1%, resulting in a NTC increase of about 5.5%. The
following table shows the changes in the city’s tax rate, taxable net tax capacity, tax levy, and general fund
budget over the past five years.
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
Wages and Benefits
Similar to last year, we are proposing a 3% increase for non-union employees to keep our compensation
consistent with our peer cities. The bargaining union contracts (Patrol, Sergeants, and 49ers) have
approved a 2.75% increase with a market adjustment to peer average COLA increase for 2020.
Health insurance is typically budgeted at a 5% increase. This number can be adjusted following our
annual renewal in August and after open enrollment when we know which plans are chosen.
The employer contribution to the Police & Fire PERA is increasing 0.75%, from 16.95% to 17.7% in
2020. Workers’ compensation premium rates are expected to increase an overall average of 3%; however,
some job classes will see significant increases, such as police with a 14% rate change.
State Aid
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. Depending upon the tax bill to be approved by the state, LGA could range from
$334,000 - $421,000.
Transfers 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. The transfer from ERMU is allocated
primarily to the General Fund and any excess to the Equipment Replacement Fund.
Other Information
Most revenue items are consistent with last year and we continue to monitor building activity and
revenue updates.
The state fuel contract will again be used for 2020 – fuel price will start at $2.75 per gallon.
The tax abatement levy will decrease about $21,000 due to the completion of a tax abatement
agreement in 2019.
Additional debt service from the public safety building bonds will be added on to the tax levy.
Council Consideration
Preliminary budget will be drafted based on the same level of service as in 2019. Does the Council
desire service level increases/decreases? Where?
To meet the Council goals, does the Council wish to increase the general levy for park
improvements, vehicle replacement and/or building improvements?
The city administrator has attempted to decrease the tax rate each year utilizing new growth. Is this
important?
Financial Impact
N/A
Attachments
None
N:\\Public Bodies\\Agenda Packets\\05-06-2019\\x10.7 sr 2020 Budget Discussion.docx