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7.1. SR 12-02-2019Request for Action To Item Number Mayor and City Council 7.1 Agenda Section Meeting Date Prepared by Public Hearin December 2, 2019 Lori Ziemer, Finance Director Item Description Reviewed by 2020 Budget and Tax Levy Cal Portner, City Administrator Reviewed by Action Requested ■ Adopt, by motion, the resolution authorizing the property tax levy for collection in 2020. ■ Approve, by motion, the 2020 General, Special Revenue, and Enterprise Fund budgets. Background/Discussion City staff began the budgeting process in May developing their 2020 department goals and requested budgets. The City Council and staff have since met in numerous work sessions reviewing in detail department's operating budgets and the property tax levy. In September, the Council approved the preliminary tax levy that was used to calculate the proposed property tax notice that was mailed to each property owner in November. Tax Lew On September 3, the City Council adopted the preliminary tax levy of $12,953,570. Since then, additional reductions of $87,800 have been made to the General Fund budget. The $12,865,770 proposed tax levy reflects a one-time city contribution for the Lake Orono dredging project, as well as Council's goal of establishing capital reserves for future financial sustainability. The county estimates the city's Net Tax Capacity (NTC) values increasing about 7%, attributable to market value increases and new growth. The final NTC may change slightly as the county continues to update property values before calculating taxes in early 2020. Based on the current NTC values, the proposed tax capacity rate is 46.171%, a slight increase from last year's rate of 45.907%. The city accounts for about 36% of a homeowner's total property tax bill. The remainder is attributed to the county (37%), the school district (25%), and other jurisdictions (2%). For businesses, the city's share is about 27% of the total. The majority of the property tax levy (93%) is used to fund city services such as police, fire, street maintenance, parks and recreation, and general government. The remaining 7% pays for debt service, tax abatement, library operations, and Lake Orono dredging. General Fund Budget The 2020 General Fund budget is at $17,019,600, which is a 4.9% increase over 2019. The greatest portion of the city's General Fund operating budget is dedicated to public safety programs and services, with general government, public works, and culture and recreation making up the balance. Due to the fact AR that city government is primarily a service industry, 78% of the operating budget is for personal service expenditures. Financial Impact Summary of 2020 Budgets Below is a summary of the proposed budgets Council has reviewed and to be approved: General Fund $17,019,600 Special Revenue Funds: Library $ 115,100 Ice Arena $ 766,300 Enterprise Funds: Attachments ■ Tax levy resolution ■ Tax levy breakout ■ General Fund summary Revenues Expenditures Depreciation Capit Net Effect Sewer $2,500,500 $2,437,200 $1,641,000 $ - $(1,577,700) Liquor $7,505,900 $7,168,250 $ 123,000 $ - $ 214,650 Garbage $1,672,000 $1,581,150 $ - $ - $ 90,850 Storm Sewer $ 553,000 $ 599,100 $ 458,000 $ - $ (504,100) Attachments ■ Tax levy resolution ■ Tax levy breakout ■ General Fund summary City of Elk River Resolution 19- A Resolution of the City of Elk River Authorizing the Proposed Property Tax Levy for Collection in 2020 WHEREAS, the Elk River City Council has reviewed the City's anticipated expenditures for all funds in 2020; and, WHEREAS, the Elk River City Council has considered projected revenues for all funds in 2020; 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, Minnesota, as follows: The following amounts are to be levied as property taxes payable in 2020: Levy— General evy General Fund $ 11,938,300 Library 69,000 2010A G.O. Capital Improvement Plan Bonds 619,920 Economic Development Tax Abatement 138,550 Lake Orono Dredging 100,000 TOTAL $ 12.865.770 Passed and adopted this 2nd day of December 2019. ATTEST: Tina Allard, City Clerk John J. Dietz, Mayor 2020 PROPOSED TAX LEVY City of Elk River Levied Preliminary Proposed Tax Levy Pay 2019 Pay 2020 Pay 2020 General Fund $11,187,400 $12,026,100 $11,938,300 Library 66,000 69,000 69,000 General Property Tax Levy 11,253,400 12,095,100 12,007,300 Special Levies: 2010 GO Public Safety Building Bonds 470,130 619,920 619,920 Economic Development Tax Abatement 160,235 138,550 138,550 Government Building Reserve 55,000 - - Lake Orono Dredging - 100,000 100,000 Total Levy $11,938,765 $12,953,570 $12,865,770 General Fund Change from Previous Year $689,600 $838,700 $750,900 Percentage Change from Previous Year 6.6% 7.5% 6.7% Total Dollar Change from Previous Year $874,935 $1,014,805 $927,005 Change 7.9%1 8.5%1 7.8% NTC Value $26,006,616 $27,865,472 $27,865,472 Tax Rate 45.907 46.487 46.171 CITY OF ELK RIVER GENERAL FUND BUDGET Public Safety Police 2019 2020 % of % Fire Budget Final Budget Budget Change General Fund Revenues: 513,500 527,550 3.1% 2.7% Property taxes $11,187,400 $11,938,300 70.1% 6.7% Other taxes 150,000 140,000 0.8% -6.7% Licenses & Permits 857,000 798,500 4.7% -6.8% Intergovernmental Revenues 571,500 611,500 3.6% 7.0% Charges for Services 969,200 947,500 5.6% -2.2% Fines 154,500 140,000 0.8% -9.4% Other Revenues 259,500 276,500 1.6% 6.6% Transfers In 2,072,100 2,167,300 12.7% 4.6% Total General Fund Revenues 16,221,200 17,019,600 100.092. 4.9% General Fund Expenditures General Government: Mayor & Council 149,050 163,050 1.0% 9.4% Communications 326,350 328,950 1.9% 0.8% Administrative Services 531,850 568,850 3.3% 7.0% Human Resources 280,500 305,800 1.8% 9.0% Elections 6,800 83,200 0.5% 1123.5% Finance 644,550 648,700 3.8% 0.6% Information Technology 440,000 556,300 3.3% 26.4% Legal 230,000 240,000 1.4% 4.3% Community Development 162,750 206,650 1.2% 27.0% Planning 352,550 352,350 2.1% -0.1% Building Maintenance 726,550 767,750 4.5% 5.7% Energy City 31,150 27,550 0.2% -11.6% Total General Government 3,882,100 4,249,150 25.09/. 9.5% Public Safety Police 5,856,650 6,186,750 36.4% 5.6% Fire 1,353,900 1,398,600 8.2% 3.3% Building Safety 513,500 527,550 3.1% 2.7% Code Enforcement 115,700 99,450 0.6% -14.0% Environmental 32,450 53,150 0.3% 63.8% Total Public Safety 7,872,200 8,265,500 48.6% 5.0% Public Works Street Maintenance 1,418,150 1,386,700 8.1% -2.2% Snow Removal 279,600 305,900 1.8% 9.4% Equipment Services 221,400 231,200 1.4% 4.4% Engineering 357,750 385,500 2.3% 7.8% Total Public Works 2,276,900 2,309,300 13.6% 1.4% Culture & Recreation: Parks Maintenance 1,147,600 1,272,700 7.5% 10.9% Recreation 792,000 721,100 4.2% -9.0% Sr. Citizen Programs 250,400 201,850 1.2% -19.4% Total Culture & Recreation 2,190,000 2,195,650 12.9% 0.3% Total General Fund Expenditures $16,221,200 $17,019,600 100.0% 4.9% 2020 Budget and Tax Levy City Council Meeting December 2, 2019 a �. y* c T zz D _, 6 a Budget Objectiw%.Ohcfta • Balanced General Fund budget • Maintain existing services and programs • Retention and recruitment of personnel • Provide adequate funding for today and sustainability for the future Proposed Property"Fax Notice Proposed Property Taxes and 1Y1e Angs by Jutsd is bon to r You r Pro party Contact lnfarmation Aclual20ill Prapa"02630 Mlfretlfrp information 1` Sherburne County 65417 70$.212 UOP_M. DEC 2MION 1 Di€KELRP& Cc BCAPO WWI) FK)OM ISOD Buoms CMrDi GOVERNMENT CENTER ELK RIVER 111 SM EIX IOVER MN 56330 76& 1% 30M 2 am Niklet CRY iALMRTNER CITY NALL 13D85ORONO PkW LUC RWER.IIN SM 763 6351 COD STATE GENERAL TAX 3 ELK FAV ER 072!! Veer appmed kwe r;X :.1+1.iN.As LAIMCTOR 01hr Mcalkti o �15C00R1MERlNN ng ►� !NIG L M 241343 F Ofher Special Tarim© CDWtricft: Yorrrtowd mirce wa schkm amre Pkab r i mewdo at oho HOVENWR am&* Wcibrtf to rmftw j4 was OPVMW ov rre vaesfs re scrod dbv'rft rarrr ippmr W opm7r %a is 2MO w" d kVAr%M** pdP®w+d anoa'1 aown am of note Total exdud114 any "d as mew is 20913 00 2282.00 0:30 P Mt DEC 2 WDN 622 75 Ba'� $t CRY HALL 13005 DFOM P11A1MRY ELX RIYERM N%= NO WETING REQUIRED 46136 600 P.M. DEC 9 MON 77Z68 M4.07 SD40MDOTOFFICE 11 SW 193A D A1%E NW ELK RIVEROAN 5533D 0600 1290 NOMEETING REC"RED Yorrrtowd mirce wa schkm amre Pkab r i mewdo at oho HOVENWR am&* Wcibrtf to rmftw j4 was OPVMW ov rre vaesfs re scrod dbv'rft rarrr ippmr W opm7r %a is 2MO w" d kVAr%M** pdP®w+d anoa'1 aown am of note Total exdud114 any "d as mew is 20913 00 2282.00 Property Tax Valuation/Classification VALUES Am mAsswir-A T)oN Step Taxan P*yW* Year 2019 E:hfrated Market Vatue 158,700 170,300 �Iornpc-*ad Ekol.mn 72.967" 21.913 �1}rrr €¢uxrt.�Sarror4 Taxable 4larke" take 135.743 118.387 Prop" %iatt;Acitnn Ft- fi64A6M RESAA Ste 1 PROP06ED TI1x ge °off Tamm m elm cmdft Z=00 clso S+r " 00"mark creat O&w cn.des St[rj: PROPERTY TAX STAT`EAAENT 3 Cnwinq in 2020 Teo Ira 1Mtlr to "a, -ft * or PROP06ED LEE" 13 NOW ra tao We IV (apwr s a'.,e rr•ic l t3 Tax --ot Market Value Questions? • Contact Sherburne County City Tax Levy 2019 2020 2020 Change Levy Component Levy Preliminary Proposed Amount Percent General Fund $11,187,400 $12,026,100 $11,938,300 $750,900 6.7% Library 66,000 69,000 69,000 3,000 4.6% Debt Service 470,130 619,920 619,920 149,790 31.9% Tax Abatement 160,235 138,550 138,550 (21,685) -13.5% Govt. Building Reserve 55,000 - - (55,000) -100.0% Lake Orono Dredging - 100,000 100,000 100,000 - $11,938,765 $12,953,570 $12,865,770 $927,005 7.8% Total NTC Valuation $26,006,616 $27,865,472 $27,865,472 $1,858,856 7.2% Tax Rate - City 45.907% 46.487% 46.171% 0.264% 0.6% Items Impacting the Tax Levy • Wages/benefits • Phased retirement • Police staff addition • Elections • Technology upgrades • Debt service • Lake Orono dredging • Government building reserve • ERMU transfer • All other changes (net) TOTAL $518,850 60,900 75,600 55,400 68,000 149,790 100,000 (55,000) (169,000) 122,465 $927,005 Tax Levy History (2011-2020) $16,000,000 $11,938,765 $12,000,000 $11,112,391 $10,175,765 $10,017,357 $10,563,770 $12,865,770 r $11,063,830 $10,275,815 $9,853,835 $10,171,733 $8,000,000 $4,000,000 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Avg. -1.6% Tax Levy by Use Debt Service 4.8% Library 0.5% Econ. Development Lake Orono 1.110 Dredging 92.89 2020 General Fund Budget Summarx Revenues: Property Taxes Other Taxes Licenses & Permits Intergovernmental Charges for Services Fines Other Revenues Transfers In Total Revenues Expenditures: General Government Community Development Public Safety Public Works Culture & Recreation Total Expenditures 2019 2020 % $ BUDGET PROPOSED CHANGE CHANGE $11,187,400 $11,938,300 6.7% $750,900 150,000 140,000 -6.7% (10,000) 857,000 798,500 -6.8% (58,500) 571,500 611,500 7.0% 40,000 969,200 947,500 -2.2% (21,700) 154,500 140,000 -9.4% (14,500) 259,500 276,500 6.6% 17,000 2,072,100 2,167,300 4.6% 95,200 $16,221,200 $17,019,600 4.9% $798,400 $2,609,100 $2,894,850 11.0% $285,750 1,208,100 1,266,700 4.9% 58,600 7,210,550 7,585,350 5.2% 374,800 3,003,450 3,077,050 2.5% 73,600 2,190,000 2,195,650 0.3% 5,650 $16,221,200 $17,019,600 4.9% $798,400 General Fund Expenditures - by Function EXPENDITURES: 2019 BUDGET 2020 PROPOSED General Government $2,609,100 $2,894,850 Comm. Development 1,208,100 1,266,700 Public Safety 7,210,550 7,585,350 Public Works 3,003,450 3,077,050 Culture/Recreation 2,190,000 2,195,650 TOTAL $16,221,200 $17,019,600 Public Works 18% Culture/Rec 13% General Government 17% Public Safety 45% Comm. Development 7% General Fund Expenditures - by Category EXPENDITURES: 2019 BUDGET 2020 PROPOSED CHANGE Personal Services $12,525,400 $13,239,750 $714,350 Supplies 1,094,850 1,146,550 51,700 Service Charges 2,600,950 2,633,300 32,350 TOTAL $16,221,200 $17,019,600 $798,400 Supplies 7% Service Charges 15% General Fund Revenues - by Source REVENUES: 2019 BUDGET 2020 PROPOSED Property Taxes $11,187,400 $11,938,300 Other Taxes 150,000 140,000 Licenses & Permits 857,000 798,500 Intergovernmental 571,500 611,500 Charges for Services 969,200 947,500 Fines 154,500 140,000 Other Revenues 259,500 276,500 Transfers In 2,0721100 2,167,300 TOTAL $16,221,200 $17,019,600 Intergovt Licenses/ Permits 13%� 5% Other Taxes 1% Charges for Other Fines Revenues Servic-- 5% i Trnncfarc In 70% General Fund Budget History $18,000,000 $16,000,000 $14,000,000 $12,000,000 Transfer out $10,000,000 i Capital ■ Service Charges $8,000,000 ■ Supplies $6,000,000 ■ Personal Services $4,000,000 $2,000,000 $0 Avg. - 3.6% _ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Other Budgets ■ Special Revenue Funds: LIBRARY ICE ARENA REVENUES: Property Tax $ 69,000 $ - User Fees - 591,200 Other 8,100 23,100 Transfers 28,000 - TOTAL REVENUES 105,100 614,300 EXPENDITURES: Personal Services - 505,650 Supplies 8,500 86,650 Service Charges 96,600 174,000 Capital 10,000 TOTAL EXPENDITURES 115,100 766,300 NET CHANGE $ (10,000) $ (152,000) Other Budgets ■ Enterprise Funds: LIQUOR GARBAGE SEWER STORM SEWER REVENUES: Sales $ 7,441,000 $ - $ - $ - Cost of Sales (5,280,000) - - - Gross Profit 2,161,000 - - - User Charges - 1,666,000 2,230,000 550,000 Other Revenue 64,900 6,000 270,500 3,000 TOTAL REVENUES 2,225,900 1,672,000 2,500,500 553,000 EXPENDITURES: Operating Expenditures 1,188,250 1,531,150 1,612,900 583,600 Depreciation 123,000 - 1,641,000 458,000 Transfers Out 700,000 50,000 155,000 15,500 Debt Service - - 669,300 - TOTAL EXPENDITURES 2,011,250 1,581,150 4,078,200 1,057,100 NET CHANGE $ 214,650 $ 90,850 $ (1,577,700) $ (504,100) Tax Capacity Rates city, county & school comparison (estimates only) ENTITY 2019 ACTUAL 2020 PROPOSED CHANGE City 45.907 46.171 0.6 EDA 1.279 1.200 -6.2% HRA 1.217 1.329 9.2% County 47.928 47.390 -1.1% School 32.865 32.716 -0.5% TOTAL 129.196 128.806 -0.3 PropertyTax Dollar Distribution Other $.02 School District $.25 LftA lim County $.37 City $.36 Estimated CityTax Impact ** Residential (Homestead): With Valuation Change Impact ** Median Value Home Commercial/Industrial: Market Value Value Change City Portion Dollar change Percent change 45.907 46.171 of Property Tax 2019 2019 45.907 46.171 Market Value Value Changel Dollar change Percent change 2019 2020 2019 2020 $178,900 $192,900 7.8% $724 $799 $75 10.4% $253,600 $270,100 6.5% $1,098 $1,187 $89 8.1% $338,800 $350,100 3.3% $1,524 $1,590 $66 4.3% $392,400 $407,800 3.9% $1,793 $1,880 $87 4.9% $229,900 $241,200 4.9% $979 $1,042 $63 6.4% $200,000 $200,000 1 0.0% 1 $830 $835 1 $5 1 0.6% ** Median Value Home Commercial/Industrial: Market Value Value Change City Portion of Property Tax Dollar change Percent change 45.907 46.171 2018 2019 2019 2020 $4,513,000 $1,597,100 $4,505,300 $1,617,000 -0.2% 1.2% $41,091 $14,319 $41,257 $14,585 $166 $266 0.4% 1.9% $2,000,000 $2,000,000 0.0% $18,018 $18,122 $104 0.6% Distribution of 2020 Estimated City PropertyTax Bill = $1,042 Library Debt Service $6 $50 Culture/Rec. $125 Public Works $175 Econ. Develop. $11 Lake Orono $8 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Sherburne County - 2020 Proposed Tax Rates Becker Zimmerman Elk River Big Lake East St. Cloud Princeton Clear Lake 2020 Sherburne County avg. = 52.609% Next: ■ Receive public comment regarding budget levy ■ Adopt 2020 Property Tax Levy ■ Approve 2020 General, Special Revenue, and Enterprise Fund budgets