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Home My WebLink About10B - 2009 City Budgets MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: 4646 Dakota Street S.E. Prior Lake, MN 55372 -1714 CITY COUNCIL AGENDA REPORT SEPTEMBER 15, 2008 10 B Ralph Teschner, Finance Director CONSIDER APPROVAL OF A RESOLUTION ADOPTING PROPOSED 2009 CITY BUDGETS AND CERTIFYING PRELIMINARY 2009 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION Introduction Truth in Taxation statutes require that each "taxing authority" adopt a proposed budget and certify a preliminary tax levy for payable 2009 property taxes to the Scott County Department of Taxation on or before September 15, 2008. The attached resolution would fulfill this statutory requirement. The purpose of this statutory requirement is to allow the County adequate time to prepare, calculate and mail "Truth in Taxation" notices of proposed property taxes for the county, school district, city and special taxing districts to taxpayers. Historv The Council conducted its first 2009 budget workshop on June 2, 2008. The discussion that took place was fairly general. The objectives of the proposed 2009 general operating budget were reviewed along with possible program additions. Also, the City Council was approached as to any specific service priorities that should be incorporated into the budget for 2009. At the conclusion of the first budget study session, Council direction was for Staff to prepare an operating budget for 2009 that would accomplish these primary objectives while minimizing the property tax impact. Following this meeting the Council conducted its initial review of the proposed 2009 budget requests, including the general, water and sewer and transit enterprise fund budgets, at its second workshop on August 12, 2008. An explanation of the proposed property tax levy was reviewed along with an explanation of new proposed budget expenditures. At the conclusion of the workshop Council direction was for a property tax outcome that would represent a decrease in taxes to the average valued residential property. Current Circumstances The Council acknowledged the budget to be responsive to community needs recognizing the fact that program growth, including capital expenditures associated with the Capital Improvement Program, is for the most part funded either by enhanced revenue sources or taxes generated by new valuation growth experienced by the city. Staff carefully reviewed the proposed budget as submitted to the Council and felt there were few if any areas available to cut and still maintain the current level of services to the public. However we were able to reduce the property tax levy $25,000.00 by increasing the Enterprise Fund transfer to the General www.cityofpriorlake.com Phone 952.447.9800 / Fax 952.447.4245 Fund from $300,000 to $325,000 without affecting our present utility rate structure. This accomplishes a property tax reduction for the Prior Lake citizenry. As a result of this action the proposed 2009 budget and the property tax levy it requires have the following characteristics: . The property tax impact on a $321,000 market value home is estimated to be <0.18%> or a decrease of $1.63 per year. · The total property tax levy (not taxes) proposed for all funds represent an increase of 5Y2%. . The budgets as proposed provide for a continuation of services at existing levels and for improvements in certain areas. . Addition of one new (FTE) personnel position - fire chief. · Addition of one new (prr) personnel position - police secretary · The proposed 2009 budgets continue the focus of the Prior Lake 2030 Vision and Strategic Plan. Outlined below are the major items, outside of labor costs, that resulted in the operational increase within the proposed 2009 General Fund Budget. New or increased 2009 oDerational eXDenses*: Total.. . $147,000.00 $24,000.00 $32,000.00 $73,000.00 $20,000.00 $49,000.00 $25,000.00 $370,000.00 1. Personnel additions 2. Legal (general/prosecution) 3. Propertylliability insurance 4. Building utilities increase 5. Fuel increase 6. Debt service 7. Contingency * rounded The net increase in the proposed 2009 General Fund Operating Budget is $276,543.00. The difference is actually almost $100,000.00 less than stated in the above table because of the re-organizational savings that were implemented this year. Truth-in-Taxation Hearino Process: An exemption from the public hearing and publication requirements is provided if a city's total proposed property tax levy does not exceed its previous year final property tax levy by more than the percentage increase in the implicit price deflator (IPD). Because our proposed property tax levy increase for 2009 is higher we are required to conduct a TNT hearing which is scheduled for Monday, December 1, 2008. ISSUES: The attached resolution incorporates a proposed 2009 General Fund Operating Budget of $12,702,974 representing a 2.23% increase above the current year. A "Budget Summary" showing the increases/decreases of each respective department is attached. Overall, the proposed "preliminary" tax levy of $9,881,555 is comprised of the following elements: FINANCIAL IMPACT: ALTERNATIVES: RECOMMENDED MOTION: I PurDose Amount ..................t............ GeneralleVY_mm_ 2. I Referendu'!1_9l::!bt levies 3. I EDA builqiQg bond levy ! 4. .. _B~Y9IyiQg equipment fund levy__ 5. __9.!P special debt leviesm _, TotalE)t(;!.p~rJY Tax Levy I $7,004!~?~:00 $1,039,614.00 $586,120.00 $250,000.00 $1,000,993.00 ~~L~~1 ,555.00 The initial property tax levy certification for 2009 as approved this evening may only be adjusted downward when the final budget and property tax levy is considered in December. Attached to this agenda report is an updated "Property Tax Impact Analysis" that incorporates the estimated tax capacity valuation prepared by the Scott County Department of Taxation for payable 2009. The new analysis includes the finalized fiscal disparities distribution. This valuation assumes market value increase due to appreciation, new housing construction and all value relating to improvements such as additions, etc. The "Property Tax Impact Analysis" compares a residential home in 2008 adjusted by an average market value rise of 0.03% for payable 2009 property taxes. As shown on the "Property Tax Impact Analysis" the projected annual city property tax based upon the estimated 2009 tax capacity value, would be $924.08 on a $300,090 market value home in Prior Lake. This reoresents an estimated 0.18% decrease or <$1.63> for the year in city orooertv taxes from 2008 to 2009. Individual property tax amounts will be subject to slight variations from these estimates depending upon inflationary market value adjustment increases as determined by the county assessor's office. Resolution 08-xxx identifies the various city budgets and delineates the preliminary 2009 property tax levy breakdown. The City will hold a formal Truth in Taxation public hearing this year on Monday December 1, 2008 at 6:00 p.m. to receive public comment. Final budget adoption and property tax levy approval will occur the following council meeting on December 15, 2008. The following alternatives are available to the City Council: 1. Approve Resolution Adopting Proposed 2009 City Budgets and Certifying Preliminary 2009 City of Prior Lake Property Tax Levy to Scott County Department of Taxation as submitted. 2. Amend resolution to an amount determined by the City Council. Staff would recommend Alternative #1. The Council may make alternative adjustments between now and its final levy determination that must be certified in late December. Upon approval Staff will e-mail the resolution this evening to Scott County to satisfy today's statutory submittal deadline of September 15, 2008. I ReV~ Frank SpOI , C' y ~~anager ATTACH EN : ~ 1. Resolution Adopting Proposed 2009 City Budgets and Certifying Preliminary 2009 City of Prior Lake Property Tax Levy to Scott County Department of Taxation 2. Budget Summary 3. Property Tax Impact Analysis I RESOLUTION 08-xxx A RESOLUTION ADOPTING PROPOSED 2009 CITY BUDGETS AND CERTIFYING PRELIMINARY 2009 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION MOTION BY: SECOND BY: WHEREAS, Truth in taxation provisions as specified by state statute requires the Prior Lake City Council to certify a proposed property tax levy to the Scott County Department of Taxation; and WHEREAS, The City Council of the City of Prior Lake anticipates a 2009 General Fund Operating Budget increase of approximately 2.23%, which would amount to $12,702,974 and subject to approval by the City Council at its budget adoption proceeding scheduled for December 15, 2008; and WHEREAS, The City of Prior Lake's proposed 2009 Enterprise Fund budgets (Water & Sewer, Water Quality) total an aggregate $4,569,297 excluding transfers; and WHEREAS, The City of Prior Lake's proposed 2009 Transit Service Fund budget totals $810,120; and WHEREAS, The total proposed property tax levy approved has been determined to be $9,881,555; and WHEREAS, The City of Prior Lake hereby certifies that the levy certification rate will increase for payable 2009 property taxes; and WHEREAS, The proposed City of Prior Lake property tax levy for the year payable 2009 represents an increase of 5Y2%; and WHEREAS, The City Council will consider the 2009 General Operating Budget, Enterprise Fund Budgets and the Final 2009 Property Tax Levy during its regularly scheduled council meeting at 6:00 p.m. on Monday December 1, 2008 at 4646 Dakota Street SE, Prior Lake with a continuation (if necessary) at 6:00 p.m. on December 8, 2008. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE that: 1. The recitals set forth above are incorporated herein. 2. That the proposed tax levy be distributed upon the taxable property in said City for the following purposes in payable 2009: PurDose Amount * For General City Purposes Revolving Equipment Fund $7,004,828.00 $250,000.00 * www.cityofFriorlake.com Phone 952.447.9800 / Fax 952.447.4245 I * G.O. Improvement Bonds '99 (Candy Cove) $39,000.00 * G.O. Improvement Bonds '00 (Oak Ridge) $65,000.00 * G.O. Improvement Bonds '01 (Frog Town) $55,000.00 * G.O. Improvement Bonds '02 (Pixie Point) $55,000.00 * G.O. Improvement Bonds '03 (150th Street) $100,000.00 * G.O. Improvement Bonds '04 (Breezy Point) $157,000.00 * G.O. Improvement Bonds '05 (Fish Point) $100,000.00 * CSAH 82 Improvement Appropriation '06 $159,023.00 * G.O. Street Reconstruction Bonds '07 $179,970.00 * G.O. Improvement Bonds '08 (Brooksville Hills I) $91,000.00 * G.O. Building Bonds '05 (EDA) $586,120.00 ** Park Refunding Bonds '05 $660,206.00 ** Fire Station #2 Referendum Bonds '06 $213,355.00 ** Fire Station #1 Refunding Bonds '08 $166.053.00 Total... $9,881,555.00 Note: Single starred funds shall be spread over the entire consolidated City of Prior Lake. Note: Double starred funds represent market value based referendum taxes and shall be spread over the entire consolidated City of Prior Lake. Note: All other bond issues have sufficient fund balances to cover debt requirements. Passed and adopted this 2nd day of September, 2008. YES NO Haugen Erickson Hedberg LeMair Millar Haugen Erickson Hedberg LeMair Millar {Seal} City Manager City of Prior Lake H :\BUDGETI09prelimbudres,doc I "EXECUTIVE BUDGET SUMMARY" DETAILED DIFFERENCE BETWEEN ACTUAL 2008 AND PROPOSED 2009 GENERAL FUND BUDGET Denartment '08 Pronosed '09 Pro nosed % Chan~ $ Chan~ 41110 Mayor & Council $69,931 $70,131 0.29% $200 41130 Ordinance $12,000 $11,000 -8.33% -$1,000 41320 City Manager $365,418 $388,036 6.19% $22,618 41330 Boards & Commissions $13,337 $12,369 - 7.26% -$968 41410 Elections $16,297 $5,600 -65.64% -$10,697 41520 Director of Finance $130,865 $128,978 -1.44% -$1,887 41530 Accounting $174,226 $182,843 4.95% $8,617 41540 Internal Auditing $22,200 $27,200 22.52% $5,000 41550 Assessing $110,800 $105,200 -5.05% -$5,600 41610 Law $376,000 $400,000 6.38% $24,000 41820 Personnel $78,343 $135,814 73.36% $57,471 41830 Communications $126,798 $119,513 -5.75% -$7,285 41910 Comm Develop/Nat Resources $434,716 $261,924 -39.75% -$172,792 41920 Data Processing $175,595 $170,815 -2.72% -$4,780 41940 Buildings & Plant $410,056 $443,752 8.22% $33,696 42100 Police $2,992,990 $3,132,399 4.66% $139,409 42200 Fire & Rescue $766,153 $811,326 5.90% $45,173 42400 BldglTransportation Services $436,443 $363,579 -16.69% -$72,864 42500 Emergency Management $7,500 $7,500 0.00% $0 42700 Animal Control $34,890 $34,890 0.00% $0 43050 Engineering $560,159 $493,125 -11.97% -$67,034 43100 Street $949,651 $1,020,418 7.45% $70,767 43400 Central Garage $296,313 $317,264 7.07% $20,951 45100 Recreation $478,473 $475,443 -0.63% -$3,030 45200 Parks $1,302,992 $1,409,221 8.15% $106,229 45500 Libraries $100,932 $106,067 5.09% $5,135 46500 Economic Development $131,872 $142,833 8.31 % $10,961 47000 Debt Service $1,576,481 $1,625,734 3.12% $49,253 49999 Contingency Reserve $275,000 $300,000 9.09% $25,000 General Fund $12,426,431 $12,702,974 2.23% $276,543 Estimated net property tax decrease -0.18% Levy limit increase 5.93% BUDSUM,XLS Page 1 91212008 I BUDGET SUMMARY RECAP: '08 Bud!!et '09 Prooosed % 41000 GENERAL GOVERNMENT $2,516,582 $2,463,175 -2.12% 42000 PUBLIC SAFETY $4,237,976 $4,349,694 2.64% 43000 PUBLIC WORKS $1,806,123 $1,830,807 1.37% 45000 CULTURE-RECREATION $1,882,397 $1,990,731 5.76% 46000 ECONOMIC DEVELOP. $131,872 $142,833 8.31 % 47000 DEBT SERVICE $1,576,481 $1,625,734 3.12% 49999 CONTINGENCY RESERVE $275.000 $300.000 9.09% General Fund $12,426,431 $12,702,974 2.23% BUDGET BREAKDOWN: '08 Budm '09 Prooosed % of Total % Chan~ Personal Services $6,910,450 $6,829,637 53.76% -1.17% Current Expenses $3,429,410 $3,583,308 28.21% 4.49% Capital Outlay $235,090 $364,295 2.87% 54.96% Debt Service $1,576,481 $1,625,734 12.80% 3.12% Contingency Reserve $275.000 $300.000 2.36% 9.09% Total $12,426,431 $12,702,974 100.00% 2.23% DETAILED DIFFERENCE BETWEEN ACTUAL 2008 AND PROPOSED 2009 ENTERPRISE FUND BUDGETS Deoartment '08 Bud~ '09 Prooosed % Chan~ $ Chan~ 49300 Fund Transfers $1,003,414 $1,019,214 1.57% $15,800 49400 Water Utility $1,768,821 $1,761,003 -0.44% -$7,818 49450 Sewer Utility $2,326,830 $2,386,488 2.56% $59,658 49420 Water Quality Utility $315,537 $421,806 33.68% $106,269 49804 Transit Services $575.651 $810.120 40.73% $234.469 Enterprise Funds $5,990,253 $6,398,631 6.82% $408,378 BUDSUM,XLS Page 2 91212008 ACTUAL Collection Year 2008 (referendum levy) (fiscal disparities) Gross Levy PROPOSED Collection Year 2009 (referendum levy) (fiscal disparities) Gross Levy - ESTIMATED 2009 PROPERTY TAX IMPACT ANALYSIS n. (08/20/08) Property Tax Levy Referendum Market Value $7,731,288 $2,665,438,925 $1,000,311 $8.731.592 ($633,838) $9,365,437 Property Tax Levy Est. Referendum Market Value $8,121,916 $2,780,000,000 $1,039,614 $9.161.53Q ($720,025) $9,881,555 FOOTNOTES: - - Scott County TNT Values @08/7/08: $2,780,000,000 2008 est. referendum market value $28,977,784 2008 est. tax capacity value $720,025 2008 est. fiscal disparities aid Actual Tax Capacity Value 0,0375% Residential Market Value Home $200,000 $250,000 $300,000 $350,000 $400,000 Tax Capacity Value $2,000 $2,500 $3,000 $3,500 $4,000 general tax $561.35 $701.68 $842,02 $982.36 $1,122,69 m.v, tax $75,06 $93,82 $112,59 $131.35 $150,12 m.v, credit -$5430 c$4 160 -$28 90 -$ I 620 -$350 totaL $582,11 $753.91 $925,71 $1,097,51 $1,269.31 Tax Capacity Market Value Rate Rate $27,545,505 28.0673% Tax Capacity Market Value Rate Rate $200,060 Residential Market Value Home · $250,075 $300,090 $350,105 $400,120 $28,977,784 28.0281% ave. EMV taxable market inflation - 0.03% inc. .. city portion of$304 market value credit = est. .2857% (market value credit reduced by ,09% for each $100 of value exceeding $76,000) Levy Components: $7,004,828 Budget levy $1,039,614 Referendum debt levy $586,120 Building debt levy $250,000 Revolving Equipment Fund levy $1.000.993 CIP debt levy $9,881,555 ~dget Comparison,;", $12,702,974 Proposed 2009 Budget $12.426.431 Actual 2008 Budget $276,543 2.23% increase Est. Tax Capacity Value Tax Capacity 0,0374% Value $2,001 $2,501 $3,001 $3,501 $4,001 general tax $560,73 $700,91 $841.09 $981.28 $1,121.46 m.v, tax $74,81 $93,52 $112.22 $130,93 $149.63 m.v, credit -$5495 c$42 09 -$2923 -$16.37 -$351 total... $580,59 $752.34 $924,08 $1,095,83 $1,267.58 $ Property Tax Increase -$1.52 -$ 157 -$ 163 -$168 -$ 1.73 % Property Tax Increase -0.26% -0.21% -0.18% -0,15% -0.14% Payable 2009 Median Value Residential Home $262,200 Payable 2009 Ayeraqe Value Residential Home $321,300 p..., 9:44 AMBI25l2OOB * Prelim T axcaIc09