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Home My WebLink About10A - 2004 Prelim Budget DISCUSSION: H:\BUDGETl04prelimbudrpt.doc STAFF AGENDA REPORT SEPTEMBER 2, 2003 lOA RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF A RESOLUTION ADOPTING PROPOSED 2004 CITY BUDGETS AND CERTIFYING PRELIMINARY 2004 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION Truth in Taxation statutes require that each "taxing authority" adopt a proposed budget and certify a preliminary tax levy for payable 2004 property taxes to the Scott County Department of Taxation on or before September 15, 2003. 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. History: The Council conducted its first financial planning workshop on June 2, 2003. The discussion that took place was fairly general. The objectives of the proposed 2004 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 2004. At the conclusion of the first budget study session, Council direction was for Staff to prepare an operating budget for 2004 that would accomplish these primary objectives while minimizing the property tax impact. Following this session the Council conducted its initial review of the proposed 2004 budget requests, including the general, water and sewer and transit enterprise fund budgets, at its second workshop on August 4, 2003. An explanation of the proposed property tax levy was reviewed along with an explanation of all new proposed budget expenditures. 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. The Council directed the Staff to prepare a list of options to limit the tax increase to zero % on the city's portion of the property tax. Attached is a list of options. The Council will conduct another 16200 Eagle Creek Ave. S.E.. Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER workshop prior to this meeting to discuss these options for reducing the tax levy. Current Circumstances: The draft 2004 budget and the property tax levy it requires have the following characteristics: · The property tax levy proposed is $1,309 below the levy limit as determined by the State of Minnesota after declared special levies. · The proposed property tax levy recovers the entire loss of the market value credit aid ($365,406.00). . The budgets as proposed provide for a continuation of services at existing levels and for improvements in certain areas including economic development and the water/sewer departments. · The proposed 2004 budgets continue the focus of the Prior Lake 2020 Vision and Strategic Plan. ISSUES: The attached resolution incorporates a proposed 2004 General Fund Operating Budget of $8,826,570 representing a 2.20% increase above the current year. A "Budget Summary" showing the increases/decreases of each respective department is attached. The initial property tax levy certification for 2004 as approved this evening may only be adjusted downward. As indicated below the City will be just under the levy limit that the state has established for us. Overall, the proposed "preliminary" tax levy of $6,663,000 IS comprised of the following elements: i::l!~~~~~~::':"-::::::.::'::I:=:~~:~:~:~!::=: i ! i i.i.I:i:i~~~~~i)~~:=:::::::::::::::p~;~~:!;2~2:~~. i 2. I G.O. Debt Service (market value levy) I $770,260.00 11:::I~~~i!~in~~~i~~t~H~~Y!s[~~:::::::::F::l~~-~:~~~:~~: ,."".".".".".".!.......-.......................................................-....-.-............-.---.....-.-.--.-. .........+..............--...........................--............. I 5. I 2004 Capital Project levy I $116,000.00 !.....T..............t~-iiii!'F~.P:~Fi,;;t~:f:~~yI~~;~~~;2~~.:6~] The portion of the proposed property tax levy subject to the city's maximum levy limit, as imposed by the state, is outlined in the table below: I~t. ~~~_~:~!~~.~:!=~~:~.:il.:==. =~~~:i:~:~~t~~=:::=:-::I:~~~~~~~!~~:::::1 t Prior Lake Levy Subject to Levy Limit* $4,888,058.00 1~~~rf~~E~:~p:~~).~i}:)~~!:r;eyf~s::-=.:.::.:..:::.:iI!,:~~:!;~~2~~Q-- , Pnor Lake Payment of Bonds of Another! $ 303,255.00 "--'--"""""""'--'--""""".'."".'.'--'.-.---'---'-.--...........................................................__________.................................._L......._....,n....___,__._._...u................ H:\BUDGET\04prelimbudrpt.doc 1~~f~~~~~~~~~~~~~,~i~~~_~:::~:~~:~:~r~::~~~~;~;~~~]1 ' Total Property Tax Levy I $6,663,000.00 l~~j,~~~~ti~i~~i~~~~i~~~~~~~~~~~~t~~~~~~::'~:J IMPACT TO TAXPAYERS: 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 2004. The new analysis includes the finalized fiscal disparities distribution that resulted in the proposed tax impact reduction. 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 2003 adjusted by an average market value rise of 12% for payable 2004 property taxes. As shown on the "Property Tax Impact Analysis" the projected annual city property tax based upon the estimated 2004 tax capacity value, would be $839.68 on a $224,000 market value home, which approximates the average market value house in Prior Lake. This represents a 1.08% increase or $8.93 in city property taxes from 2003 to 2004. This increase is .81% lower than the initial estimate of 1.89% discussed at the workshop because of the final fiscal disparity amount that was just recently determined by Scott County. 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. Conclusion: Resolution 03-XX identifies the various city budgets and delineates the preliminary 2004 property tax levy breakdown. The City will hold a formal Truth in Taxation public hearing this year on Monday December 1,2003 at 7:00 p.m. to allow for public comment. ALTERNATIVES: The following altematives are available to the City Council: 1. Approve Resolution Adopting Proposed 2004 City Budgets and Certifying Preliminary 2004 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. RECOMMENDED MOTION: Staff would recommend approval of Resolution Adopting Proposed 2004 City Budgets and Certifying Preliminary 2004 City of Prior Lake Property Tax Levy to Scott County Department of Taxation. The Council may make alternative adjustments between now and its final levy determination that must be certified in late December. H:\BUDGETI04prelimbudrpt.doc -,~--- The City Council should discuss the appropriateness of the tax reduction options a the impact of each in achieving our 2004 obj tives. REVIEWED BY: Attachments: 1. Resolu on dopting Proposed 2004 City Budgets and Certifying Preliminary 004 City of Prior Lake Property Tax Levy to Scott County Department of Taxation 2. Updated Property Tax Impact Analysis 3. Budget Summary 4.Tax Reduction Options H:\BUDGETl04prelimbudrpt.doc RESOLUTION 03-XX ADOPTING PROPOSED 2004 CITY BUDGETS AND CERTIFYING PRELIMINARY 2004 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 2004 General Fund Operating Budget increase of approximately 2.20% which would amount to $8,826,570.00, and subject to approval by the City Council at its budget adoption proceeding scheduled for December I; and WHEREAS, The City of Prior Lake's proposed 2004 Enterprise Fund budgets total an aggregate $3,301,868.00 which includes the Water & Sewer Utility, Water Quality Utility and Transit Services, and WHEREAS, The total proposed property tax levy approved has been determined to be $6,663,000.00; and WHEREAS, The City of Prior Lake hereby certifies that the levy certification rate will increase for payable 2004 property taxes; and WHEREAS, The proposed City of Prior Lake property tax levy for the year payable 2004 represents an increase of 9.9%; and WHEREAS, The City Council will consider the 2004 General Operating Budget, Enterprise Fund Budgets and the Final 2004 Property Tax Levy during its regularly scheduled council meeting at 7:00 p.m. on Monday December I, 2003 at 16776 Fish Point Road, Prior Lake with a continuation (if necessary) at 7:00 p.m. on December 8, 2003. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, that the proposed tax levy be distributed upon the taxable property in said City for the following purposes in payable 2004: Purpose Amount * For General City Purposes $4,931,740.00 * Revolving Equipment Fund $270,000.00 * G.O. Improvement Bonds '94 (Prior South) $55,000.00 * G.O. Improvement Bonds '95 (Ridgemont) $45,000.00 16200 Eagle Creek Ave. S.E., Prior Lake. Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 H:\BUDGE1\04budprelimres.doc AN EQUAL OPPORTUNITY EMPLOYER * G.O. Improvement Bonds '96 (Northwood) $50,000.00 * G.O. Improvement Bonds '97 (Pike Lake) $71,000.00 * G.O. Improvement Bonds '98 (Duluth) $73,000.00 * G.O. Improvement Bonds '99 (Candy Cove) $72,000.00 * G.O. Improvement Bonds '00 (Oak Ridge) $77,000.00 * G.O. Improvement Bonds '01 (Frog Town) $64,000.00 * G.O. Improvement Bonds '02 (Pixie Point) $68,000.00 * G.O. Improvement Bonds '03 (150th Street) $116,000.00 ** Fire Hall Referendum Bonds '93 $158,715.00 ** Park Referendum Bonds' 97 $611,545.00 Total... $6,663,000.00 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 2003. 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"BUDGET SUMMARY" DETAILED DIFFERENCE BETWEEN ACTUAL 2003 AND PROPOSED 2004 GENERAL FUND BUDGETS DeDartment '03 Budl!et '04 ProDosed % Chanl!e $ Chanl!e 41110 Mayor & Council $50,973 $49,313 -3.26% -$1,660 41130 Ordinance $9,500 $9,500 0.00% $0 41320 City Manager $341,665 $290,413 -15.00% -$51,252 41330 Boards & Commissions $12,824 $9,324 -27.29% -$3,500 41410 Elections $3,553 $10,734 202.11 % $7,181 41520 Director of Finance $111,658 $118,888 6.48% $7,230 41530 Accounting $130,045 $143,052 10.00% $13,007 41540 Internal Auditing $14,900 $13,400 -10.07% -$1,500 41550 Assessing $67,900 $78,100 15.02% $10,200 41610 Law $242,000 $236,000 -2.48% -$6,000 41820 Personnel $73,033 $73,696 0.91% $663 41830 Communications $0 $110,609 nla $110,609 41910 Planning & Zoning $291,761 $231,004 -20.82% -$60,757 41920 Data Processing $92,700 $107,525 15.99% $14,825 41940 Buildings & Plant $270,713 $291,133 7.54% $20,420 42100 Police $2,106,318 $2,177,947 3.40% $71,629 42200 Fire & Rescue $394,259 $440,753 11.79% $46,494 42400 Building Inspection $428,880 $458,069 6.81% $29,189 42500 Civil Defense $28,150 $27,650 -1.78% -$500 42700 Animal Control $16,010 $16,010 0.00% $0 43050 Engineering $515,660 $551,254 6.90% $35,594 43100 Street $591,117 $595,763 0.79% $4,646 41950 Central Garage $194,195 $235,536 21.29% $41,341 45100 Recreation $687,565 $358,088 -47.92% -$329,477 45200 Parks $917,809 $954,782 4.03% $36,973 45500 Libraries $70,815 $72,335 2.15% $1,520 46500 Economic Development $67,359 $245,432 264.36% $178,073 47000 Debt Service $755,170 $770,260 2.00% $15,090 49999 Contingency $150.000 $150.000 0.00% $Q General Fund $8,636,532 $8,826,570 2.20% $190,038 DETAILED DIFFERENCE BETWEEN ACTUAL 2003 AND PROPOSED 2004 ENTERPRISE FUND BUDGETS DeDartment '03 Bndl!et '04 ProDosed % Chanl!e $ Chanl!e 49400 Water Utility $793,472 $966,156 21.76% $172,684 49450 Sewer Utility $1,304,552 $1,547,759 18.64% $243,207 49420 Water Quality Utility $282,674 $294,077 4.03% $11,403 49804 Transit Services $470.912 $493.876 4.88% $22.964 Enterprise Funds $2,851,610 $3,301,868 15.79010 $450,258 BUOSUM.xLS Page 1 816103 POSSIBLE TAX REDUCTION OPTIONS In order to have a 0% property tax increase the tax levy must be reduced by $63,000.00. The following options and/or combinations could be considered by the City Council: 1. Contingency - Reduce Contingency from $150,000 to $100,000 Savings: $50,000 2. Personnel- Establish Economic Development Dir. position effective 7/1/04 vs. 1/1/04 Savings: $52,600 3. Data Processing Dept. - Delay PC replacement Savings: $20,000 4. Police Dept. - Replace one marked squad unit vs. two in 2004 Savings: $22,000 5. Fire Dept. - Defer confined space rescue equipment until 2005 Savings: $12,000 6. Civil Defense - Defer Brooksville Hills siren replacement until 2005 Savings: $20,000 7. Street Dept. - Reduce street overlay/sealcoating program Savings: $50,000 8. Economic Development Dept. - Eliminate property acquisition options for one year Savings: $35,000 16200 E\';~~fMPI'W&.oS.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER