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5.1. - 5.5. SR 09-09-2002MEMORANDUM TO: FROM: DATE: Mayor and City Council Pat Klaers, City A~~f~~ September 9, 2002 SUBJECT: Tax Levies Item #s 5. I. - 5.5. At the August 12, 2002 budget worksession the City Council reviewed general fund expenditures that exceeded $7.9 million. Unfortunately, general fund revenues were less than $7.6 million and this resulted in a budget gap of $362,100. At the August 26, 2002 budget worksession, numerous changes were made to the draft budget that was reviewed on August 12 (see attached August 26, 2002 memo). These changes included: adding revenues to the general fund (this included a change in the surface water tax levy and lockout fees); some requests for additional staffing were eliminated or reduced; some program expenditures were decreased; some miscellaneous expenditures were eliminated; and some items (computers) were proposed to be purchased in 2002 rather than in 2003. These changes resulted in a general fund budget gap of $79,100 and this budget gap does not include any revenues from a gas franchise fee. If a gas franchise fee is to take place in 2003 then this budget gap would be significantly reduced as the gas franchise fee would be applied to the street program and then the street levy could be moved into the general fund. The above changes that resulted in a $79,100 budget gap shows revenues at $7,653,950 and expenditures at $7,733,050. It should be noted that if expenditures do not change from the above preliminary number of $7,733,050, then the budget will be going up 7.17%. This would be the lowest budget increase since 1993. The only way that this is being accomplished is through moving capital expenditures out of the general fund into equipment certificates and reserves, and by adding a very limited amount of new positions and additional hours for existing staff. Changes in the budget are still occurring and will continue to take place until the budget and levy are set in December following the truth in taxation public hearing. In addition to balancing the 2003 budget, the city needs to consider what the 2003 Legislature may do to local government aids (LGA). It is expected that there will be a state budget defidt and that LGA will be cut in 2004 and we hope that aids are not cut or reduced in 2003 after the municipal budget is approved. However, if LGA is reduced in 2003 after the budget is approved, then the city will need to look at other cuts in expenditures and adding reserves to the revenues in order to balance the budget. The proposal before the City Council for the general fund tax levy is the same as what was discussed at the August 26 worksession. This proposal is to levy to the maximum amount allowed per the state levy limit law. The General Fund, Street Replacement, Library, and Surface Water levies all fall under the levy limit law. The tax levy resolution that is in this packet also covers spedal levies including an amount for the public safety building. Overall, the total tax levy amount is just under $6 million and this is slightly less than the total proposed at the August 26 worksession. Almost all of the decrease is in the public safety bonds due to the low interest rate which the city received. The equipment certificate tax levy amount is the same, although the number of years for the certificates has gone from four to three due to a reduction in the total expenditures amount. In a surprising development, the city has been advised by the county that the net tax capadty is projected to increase by 14.44% and the market value by 16%. This means that based on the almost $6 million tax levy that the city tax rate would go from 43.6 to 44.657. This is a 2.4% increase in the city tax rate. Due to levy limits being placed on the dty and the substantial increase in the city net tax capacity, it appears that adding the public safety bond to the tax roll in 2003 will have a minimal impact on the dty tax rate. Following a discussion on the 2003 budget and tax levy, the City Council is requested to take the following action: · Motion approving a resolution authorizing the 2003 proposed maximum property tax levy · Motion approving a resolution establishing the 2003 tax levy for the Economic Development Authority · Motion approving a resolution establishing the 2003 tax levy for the Housing and Redevelopment Authority · Motion approving the amended debt levies as presented by the Finance Department · Motion calling for a special City Council meeting on December 2, 2002 at 6 p.m. to hold the city truth in taxation public hearing on the tax levy and budget with a continuation date of December 9, 2002 at 6:30 p.m. (The alternative is to hold the public hearing on 12/9/02 with a continuation date of 12/16/02.) s:\council\pat\taxlevy9-9.doc P ver MEMORANDUM TO: FROM: DATE: SUBJECT: Mayor and Council Pat Klaers, City Administrator '~~ August 26, 2002 Recommended Changes in Proposed 2003 Budget The following changes are recommended to the draft 2003 budget. Tkis August 12, 2002 draft budget showed revenues in the amount of $7,571,200 and expenditures in the amount of $7,933,300. The resulting budget gap between requested expenditures and available revenues is $362,100. The following budget changes are recorm'nended in order to help close this budget gap: Revenues $25,000 $5,000 $9,750 $3,000 $5,000 $10,000 $5,000 Reduce the surface water management tax levsr and apply these monies to the general fund. Increase building permit estimate. State grant - safe and sober program. State/federal grant-juvenile program. Increase plan check fee est/mate. Increase liquor store transfer. Increase utilities transfer. Expenditures Personnel Services $45,600 $9,900 $15,600 $11,750 Police (investigations) - Do not fill the drug enforcement officer position. Fire department (administration) - Reduce hours for the fi.re prevention specialist from 1248 to 624. Recreation (administration) - Do not hire the requested part dine office assistant. Senior center - Do not b. ire the requested part th:ne receptionist. Pat/Budget/Rz, c~mmendedChanges Miscellaneous $-5,000 $-5,000 $-5,000 $-1,000 $-2,000 $-10,000 $-13,350 $-24,150 $+18,000 $-40,350 Mayor/Council - Reduce Heritage Preservation Commission (HPC) request - The original request was for $5,000 to hire a consultant to do an oral history and $5,000 to begin an inventory of properS.. The reduction allows the HPC to do one or the other or half of each project. Police (administration) - A high estimate for d~e VisionaLre maintenance contract was in the original August 12, 2002 budget. Streets - Con,actual services - Reduce the amount of funds spend on sealcoatmg and overlay projects to the same level that is in the 2002 budget. Shade trees - Operating supplies - reduce the tree coupon program Parks - Professional services - no Lake Orono goose trapping program in 2003 Recreation (programs) - Do not contribute, as requested, to the Boys & Girls Club for the "I~ds in Control" program. The content of this program is sh~ilar to d~e Safety Camp program, which the city runs. The city will partner with the Boys & Girls Club but should not fund their programs. The city already cont_dbutes $20,000 to the Boys & Gixls Club for staff wages for "Recycling Education" programs. Senior Center - Personal services reduction - An error was found in the number of hours worked for the e,,dstmg part t~'~e staff in the August 12, 2002 draft budget. Economic Development - Remove all expenses for personal services as the HRA and EDA will fund 100% of the econmzdc development department. Transfers need to increase for elections in order to equalize the annual tax expenditures. These monies will go into equipment reserves in 2003 and then into the general fund revenues in 2004 to partially offset the 2004 expenditure of $36,000 for elections. This sequence will be repeated for 2005-06, etc. M~scellaneous departmental adjustments The above adjustments are $233,450. This brings the total revenues to $7,633,950 and the total expenditures to $7,762,600. This leaves the city with a budget gap of $128,650. Please see the attached list of options for additional possible budget anaendments. First and foremost on this next list is the gas franchise fee. The next most important issue is the lockout fee for police services when individuals lock their keys in their vehicle. Another' Zmportant consideration is the annual wage increase. S / Coumfl/ Pal/ Budget/ IL,~z~raraendedChanges P ver MEMORANDUM TO: FROM: DATE: SUBJECT: Mayor and Council Pat Klaers, City Ad ministra~.~~, V~5~ August 26, 2002 Other BUdget Gap Options If all of the recommended ckanges from the previous page are accepted by the Cit7 Council, then the updated draft 2003 budget wi_la show revenues at $7,633,950 and expenditures ac $7,762,600. This leaves the city. ~vith a budget gap of $I28,600. Three key issues for the Cit7 Council to consider in closing this budget gap are the gas franchise fee, the police vehicle lockout fee, and a lower cost of living adjustment. ~-t~i~1~e"~he 25 year non-exclusive franchise fee with Reliant Energ7 is up on Apdl 13, 2003. Wh51e the franchise agreement is non-exclusive, it should be noted that the city rejected a request from NSP in 1999 to allow dual services in the commumty.. Only a few municipalities (less dnan 10) collect a franchise gee but I 'know that other cities are exploring dzis option. If the City of Elk River is to collect a franckbe fee, then it is recommended that these monies go to~vards the Street Pavement Management Program (PM?). This would allow the tax Iew that goes for the PMP to be reduced and then these tax funds would be avanzble £or Gener,-41 Fund expenditures. In r_his manner the gas franchise fee will not result in a tax . reduction, but it does provide for non-tax paying and tax paying entities to pay the same amount for the Street PMP program, if the city is to go forward with a franchise fee, Reliant has requested that dxe city go thzough a public process to establish t_bSs fee. The simplest method for manag~g a gas franchise fee is to do it on a meter basis. There are currendy approximately 5000 residential gas meters and 500 commercial/industrial gas meters in the city. Please consider the £ollowmg figures: 5000 residential at $1.50 per month = $90,000 5000 residential at $2.00 per month = $120,000 500 commercml/industrial at $3 per month = $18,000 500 commercial/mdusr, rial at $4 per month = $24,000 ~~~lk River is one of the few larger cities in the area that do not charge a fee for providing vehicle lockout services. Ak-host all of the metropolitan communities charge a fee. Rmmsey Lr~tiated a $20 per vehicle lockout fee in Janu~u~/2002. The City o£ Rmmsey has approximately 350 cars £or lockout service. In ELk River, about 75% of the vehicle lockout cJls are responded to by Police Officers. These are non-priority calls ,~nd the Police Officer gets there whenever he or she can. In round numbers, it is fmr to say that it ~akes about l/: hour per lockout calL. The number of lockout caJ.ls has increased sig-mfcantly over the years. In 2000 the city responded to 1,o8 lockouts and in 2001 the city responded to 1'406 lockouts. An increased number of lockout c:ffls m~e predicted in the fu~,~a:~fT--w~nt7 dollars per service is the norm and at d~-is ra~e somewhere in r_he neighborhood ~evenues could be expected. The Chief of PoLice has previously resisted charging a lockout fee as this se:-~ice is usually very positive public contact and service that the city can provide its citizens and visitors. (A large nmnber of d~e lockouts happen ~ shopp~g ~e~s.) employees for cost of Eying purposes. T~s CO2 increase is m ad,don to the wage plan s~ep ~creases for employees that happen July 1 of ~ach year. For employees ~at are ~t ~ top of ~e pay plan ~em only wage increase is ~e CO2 mcreztse. For as long as I c~n remember, the ciW h~s provided ~ 3% CO~i ~crease to ~e non-u~on employees. T~s 3% CO2 increase has generally kept the ci~ compeddv~ ~ wages wi~ its ndghbm~g and s~ar co~u~des. The concern is ~at if less ~an 3% is given m E~ and 3% is given m neighbo~g and s~ corpuscles, ~en E~ ~ver w~ begin to b~d. One year or ~o may not have a si~fican~ ~pact but I would not want to have ¢iW ~mploye~s ¢onsistendy received a low~r CO~ increase ~an neighbo~g and s~ar The d.if~'erence bet~veen a 2% and a 3% COLA increase for aLI city employees (including PoLice un_ion employees) is approximately ~28,000. Other budget options to consider IV£ayor and City, Council $5000/¢iLmmate the balance of r_he FIPC request for oral history and inventory work $500/further reduce the HPC conference and school request (This keeps $1000 in the budget for HPC conference/schools.) $2000/reduce c~ty newsletters from 6 fines per year to 4 dines per C.q ble TV $3000/Office supplies...purchase laptop ~~4n 2002 using City Councit Conlin~ency £~nds Admimstz:mon $3000/Off~ce supplies...pm:chase two ~ 2002 using City Council Conm2genc¥ funds Finance ~3000/Office supplies...purchase~'~p~ in 2002 using CiV Council Conm'~gency funds ~O~Ce $2000/Professional services.., further reduce optical m~aging contract (tZ4s keeps $3000 m the budget for optical imaging services) $23,250/Personal Services...eliminate the Truck Enforcement officer that is pIanned to begin m July 200.3... this also saves app~:oximately $50,000 in equipment certificate expenditures. $8100/Personal services.., elimm.~te Secretary/tkecepdonist position and consider r. bSs position for the 2004 budget Fire Department $3600/Of~ice supplies...use dxe Public Safety Building fund for the FF&E for the second stat:ion computers (2) and pdnter/£ax roach_me $2000/Operat:mg supplies...purchase he laptop ~ for Engine 3 in 2002 using City Council Contingency funds Emergency Preparedness $2000/Office supplies...use the Public Safety BuildS_rig fund for FF&E for tixe EOC computer and printer/fax Building and Zm4ng $2000/Equipment R & M services...get the Geobase update m 2002 (sufficient funds are in the B&Z 2002 budget) Streets $2550/Office suppEes...purchase 2 ~ now using Council Contingency funds $5350/Operatmg suppties...elmdnate the 'purchase of the paint striper and consider dzis m 2004 or use street equipment reserves and purchase now $5000/Con=actuai se~:sces.., further reduce the overby/seai coating pro,am...kbtory shows that '~ve tend to spend less ttxan $90,000 per year Shade Tree $1500/Operating supplies.., further reduce the coupon program Recreation-Admims~ation $3000/Office supplies...purchase 2 ~s in 2002 using Council Contingency funds or Equipment Reserve funds Recreation-Pro.ams 500/Decrease Arts Alliance contribution ~:\ counml\ pat\ budget\ budg=tgapoption.cioc 2003 CAPITAL OUTLAY Police Reserve Fire Emergency Prep. Building & Environ. Streets Snow Removal Equipment Services Funding Source General Equipment Equipment Department Department Item Fund Certificate Reserve Total Mayor & Council Cable TV Administration Finance Elections Planning Govt. Building . Police Police Vehicles (marked) - 4 including setup 119,200 Police Vehicles (unmarked) - I including setup 23,600 Truck Enforcement Truck, Equip., Scales 57,200 Voice Playall System 37,400 237,400 Vehicle for Fire Inspector 32,000 32,000 Siren 14,300 14,300 Front End Loader with snowplow 145,000 Pickup Truck 25,050 Snowplow 10,650 180,700 Brake Lathe 7,600 Truck Lift & Jack Stands 30,000 37,600 Parks Recreation Subtotal $ 37,400 $ 357,100 $ 107,500 $ 502,000 One Time Revenue 8/23/02 f Capitalo:03 C.~p Outlay 2003 CAPITAL OUTLAY Department Mayor & Council Cable TV Administration Finance Elections Planning Govt. Building Police Police Reserve Fire ~ -nergency Prep. uilding & Environ. Streets Snow Removal Equipment Services Parks Recreation Subtotal Item General Fund Funding Source Equipment Certificate Equipment Reserve Department Total Voice Playall System Patrol Vehicles (marked) - 5 including setup Truck Enforcement Truck, Equip., Scales Mobile Digital Computers - 5 Investigator Car Voice Playall System 37,400 148,500 57,200 243,1 O0 Vehicle for Fire Inspector 32,000 32,000 Siren 14,300 14,300 Front End Loader with snowplow 145,000 1 Ton Dump Truck 40,000 Pickup Truck 25,050 Snowplow 10,650 220,700 Brake Lathe 7,600 Truck Lift & Jack Stands 30,000 37,600 $ 37,400 $ 458,400 $ 51,900 $ 547,700 One Time Revenue NEW POSITIONS REQUESTED 2003 Department Position Requested Cable TV Assist Cable Producer Legal Secretarial Support Police Patrol Officer- Truck Enforcement P otice Secretar,/IRecepdonist Police CSO Police Bldg Maintenance Fire Fire Prevention Specialist Streets Maintenance 1 Recreation Office Assistant Recreation Office Asst./Bldg Senior Center Receptionist SUBTOTAL NEW POSITIONS Cost of Request Included in Proposed Budqet increase 15 hrs/wk $ 15,302 $ 17,297 20 hrs/wk 14,125 3,532 40 hrs/wk 46,521 23,259 40 hrs/wk 32,4.68 8,117 40 hrs/wk 32,468 10,000 20-24 hrs/wk 19,775 19,775 40 hrs/wk 42,559 8,589 20-24 hrs/wk 15,619 15,619 26 hrs/wk 17,997 17,997 20 hrslwk 11,771 11,771 $ 248,605 $ 135,956 Notes: 1. October 1 start date 2. July 1 start date 3. Seasonal (20 hrslwk for 6 months) position for parks -- RESOLUTION 02 - A RESOLUTION FOR THE CITY OF ELK RIVER A RESOLUTION AUTHORIZING THE PROPOSED PROPERTY TAX LEVY FOR COLLECTION IN 2003 WHEREAS, the Elk River City Council has review the City's anticipated expenditures for all funds in 2003; and, WHEREAS, the Elk River City Council has considered projected revenues for all funds in 2003; and, WHEREAS, revenues from sources other than property taxes are not sufficient to meet anticipated expenditures of all funds. 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 2003: General Fund Street Replacement Library Surface Water Management City Special Assessments 1994 Storm Sewer Bonds 2003 Certificate of Indebtedness 2000 Certificate of Indebtedness 1999 Certificate of Indebtedness 1998 Certificate of Indebtedness PERA Employer Rate Increase Public Safety Lease Revenue Bonds Economic Development Tax Abatement TOTAL $4,58O,O83 150,000 69,000 175,O00 25,298 115,233 140,000 41,088 35,032 33,347 9,713 620,000 5,714 $ 5,999,508 Passed and adopted by the City Council of the City of Elk River this 9th day of September, 2002. ATTEST: Stephanie Klinzing, Mayor Sandra A. Peine, City Clerk RESOLUTION 02 - A RESOLUTION FOR THE CITY OF ELK RIVER A RESOLUTION APPROVING THE 2003 TAX LEVY FOR ECONOMIC DEVELOPMENT PURPOSES FOR THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY WHEREAS, the City Council of the City of Elk River has received a request from the Economic Development Authority to levy a tax for the benefit of the Authority in the amount of .01813% of taxable market value of taxable property in the City for the year of 2003. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River as follows: The City Council of the City of Elk River proposes that a tax in the amount of .01813% of the taxable market value in the City be levied in the year 2003 for the benefit of the City of Elk River Economic Development Authority to be used for EconomJc Development Authority purposes as provided under Minnesota Statute 469.090 et. seq. Passed and adopted by the City Council of the City of Elk River, Minnesota this 9th day of September 2002. Stephanie A. Klinzing, Mayor ATTEST: Sandra A. Peine, City Clerk SIEDA/Document/Resoludon/O3edalev - RESOLUTION 02 - A RESOLUTION FOR THE CITY OF ELK RIVER A RESOLUTION APPROVING THE HOUSING AND REDEVELOPMENT AUTHORITY 2003 TAX LEVY WHEREAS, the Housing and Redevelopment Authority in and for the City of Elk River has requested that the City authorize a levy of .0131% of the taxable market value of the City for various redevelopment activities; and, WHEREAS, the City Council of the City of Elk River has consented to this levy. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River that the Housing and Redevelopment Authority in and for the City of Elk River certify a levy of .0131% of the taxable market in the City for the benefit of the Housing and Redevelopment Authority. Passed and adopted by the City Council of the City of Elk River, Minnesota this 9th day of September, 2002. Stephanie A. Klinzing, Mayor ATTEST: Sandra A. Peine, City Clerk S/EDA/H RA/Resolut/03 hralev Rdver TO: FROM: DATE: SUBJECT: MEMORANDUM Pat Klaers, City Administrator Lori Ziemer, Asst. Finance Director September 9, 2002 Amend 2003 Debt Levies Attached is a list of the debt service levy adjustments for taxes payable 2003. Some bond documents indicate that a tax levy is required due to an estimated revenue shortfall based on special assessment or tax increment income projections at the time the bond is issued. This typically happens because the revenue projections are based on very conservative estimates that exclude anticipated special assessment prepayments or increased tax increment revenue. These levies are subsequentlycancelled each year if adequate funds are available to meet debt service obligations. The levies being adjusted for taxes payable in 2003 include the 1993 B Permanent Improvement Revolving Bond and all tax increment bonds. DEBT SERVICE LEVY ADJUSTMENTS For Taxes Payable in 2003 Bond Fund 1993B Permanent Improvement Revolving Scheduled Adjusted Levy Levy 196,098 Reason for Adjustment Sufficient cash available from Special Assessments. Tax Increment Bonds - Sufficient cash available from Tax Increment related sources to cancel all related debt levies.