HomeMy WebLinkAbout10B - 2010 City Budgets and Preliminary 2010 City of Prior Lake Property Tax Levy
o~ PRIO~
C,,~ 4646 Dakota Street S.E.
U ~?:; Prio' Lake, MN 55372-1714
t\rINNESO~1" CITY COUNC:ll AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
SEPTEMBER 8, 2009
108
JERll YN ERICKSON, IFINANCE DIRECTOR
CONSIDER APPROVAL OF A RESOLUTION ADOPTING PROPOSED 2010
CITY BUDGETS AND CERTIFYING PRELIMINARY 2010 CITY OF PRIOR
LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF
TAXATION
Introduction
The Truth in Taxation statutes require that each "taxing authority" adopt a
proposed budget and cE~rtify a preliminary tax levy for payable 2010 property
taxes to the County Department of Taxation on or before September 15,
2009. The attached resolution fulfills this statutory requirement.
The 2009 Legislature made some significant changes to the Truth in Taxation
process for 2010 and bE~yond. At the meeting at which the City Council adopts
a proposed budget and tax levy (September 8), the Council must announce
the time and place of the council meeting at which the 2010 budget and levy
will be discussed and which allows for citizen input (December 7). This
information must also ble included in the meeting minutes.
Historv
The Council has held three workshops (June 1 & 29, August 3) this year to
discuss the challenges presented by the 2010 budget. The discussions have
focused on anticipated reductions in development-related revenues (i.e.
building permits, plan check fees, etc.) and interest earnings, unallotments
from the State for Markl3t Value Homestead Credit Aid, personnel costs,
inflationary pressures on fuel, supplies, and utilities and increases in debt
service payments for infrastructure reconstruction and maintenance. The
challenge for 2010 is filling a projected gap of approximately $1 million due to
these revenue shortfalls and expenditure increases.
The Council approved four staff-recommended strategies to assist in reducing
or eliminating this $1 million gap:
. Review contracts with major vendors to seek a reduction in cost from
price or service reductions
. Contain personnel costs
. Review services provided to athletic and community organizations
. Explore new revenue sources
The Council has been cognizant of the impact of the economic downturn on
the residents and business owners in Prior Lake. With that in mind, the
Council directed staff to target a 2% increase in the property tax levy which
would be used exclusively for long-term capital and infrastructure needs of the
City as follows:
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
. $170,000 - Debt service on bonds issued for street reconstruction
. $ 10,000 - Revolving Equipment Fund
. $ 20,000 - Park Matrix
A 2% increase in the property tax levy is approximately $200,000.
Current Circumstances
The attached budget overview provides a summary of the proposed revenues
and expenditures for the General Fund, Water & Sewer Fund, Water Quality
Fund, and the Transit Fund. As staff continues to implement the strategies
noted above, these numbers may change. As a result, unlike previous years,
a complete budget document cannot yet be prepared.
A number of observations can be made about next year's budgets. The
proposed 2010 General Fund budget reflects a net reduction of approximately
$320,000 or 2.6% from the 2009 budget. This has been partially achieved by
utilizing the strategies previously mentioned. In addition, certain expenditures
that were deferred as a part of the solution for addressing revenue shortfalls in
2009 were deferred an additional year or were permanently cut. The salaries
and benefits of several public works staff were reviewed and partially allocated
to the Enterprise Funds. The Council recommended reducing the contingency
reserve from $300,000 to $169,000 to make up the final $131,000 shortfall
remaining.
The 2010 Enterprise Fund budgets reflect an increase of approximately
$1,033,000 from the 2009 budget as shown below:
. $ 667,000 - Walter & Sewer Fund
. $ 33,000 - Walter Quality Fund
. $ 333,000 - Transit Fund
Approximately $590,000 of the increase is due to capital improvement
projects. Year 2010 projects that were included in the 2010-2014 Capital
Improvement Program (approved by the City Council on July 20,2009) have
been incorporated into the 2010 budget for each of the Enterprise Funds. Due
to the Met Council experiencing declining development-related revenues from
the Service Availability Charge (SAC), the City of Prior Lake is expecting to
pay an increased Municipal Wastewater Charge of approximately $50,000 or
5%. The salaries and benefits of several public works staff were reviewed and
partially allocated from the General Fund to the Enterprise Funds. Contract
bus services for Transit are projected to increase. Current expenditures have
been adjusted to reflect costs associated with operating the new Water
Treatment Facility and inflationary increases in repairs and maintenance,
supplies, and utilities.
Truth-in-Taxation Hearina Process:
As mentioned above, new legislation requires that the City Council announce
the time and place of the council meeting at which the 2010 budget and levy
will be discussed and which allows for citizen input. This information must be
included in the meeting minutes.
The public hearing on the proposed 2010 budget and tax levy will be held on
Monday, December 7, 2:009, at 6 p.m. with a continuation hearing to be
scheduled for Monday, December 21,2009, if needed.
ISSUES:
The attached resolution reflects a proposed 2010 General Fund Budget of
$12,156,839 representing a 2.6% DECREASE from the current year budget of
$12,476,974.
Overall, the proposed talx levy of $10,079,186 is comprised of the following
elements:
PurDose
Amount
.... GE!QerC3lpurpo!5E!!5 ... .... . .....
,RE!\I()I\liQ9E!9uiPlTle n t fund
! Referendum debt levies
. E:[)At>~ilclingmb()QcllE!VY
1...9IPspecialclE!btlE!\liE!:? .............m
. . .. .Tf?tEJLPCqpf!rJYTEJx.~f!vX !
$ 7,Q?9,!?Q~m
. ?~Q.QQQ
m .. mm!..... . .. m.. . 1,Q~4'~~~m
605,000
1,108,784
.. .......m l1Q,QT9, 186
The proposed tax levy of $10,079,186 represents a 2.0% increase from the
current year tax levy of $9,881,555.
The initial property tax levy certification for 2010 as approved this evening may
only be adjusted downward when the final budget and property tax levy is
considered in December.
FINANCIAL
IMPACT:
There are multiple factors that have an impact on the property tax that is levied
against an individual property. They include, but are not limited to, the
following:
1) Valuation of individual property
2) Total valuation of all properties in the community
3) Classification rates
4) Property tax levy
When anyone of these factors change, the amount of property tax levied
against a particular property will be impacted. During this past year, Prior Lake
property owners experiemced valuation adjustments ranging from a 2%
increase to a 30% decrease and the total tax capacity valuation for the City of
Prior Lake decreased approximately 3.7%. There were no changes in the
classification rates. The proposed property tax levy reflects a 2% or an
approximate $200,000 increase.
If all of the factors remained constant other than the property tax levy amount,
we could say that each property would have an approximate 2% increase in
their property tax. Because there were significant changes in the valuations of
properties throughout the city and of the city as a whole, it is not as
straightforward. Therefore, we use an average home value as a reference to
quantify the impact of the proposed levy knowing that the majority of property
owners will experience a different impact.
Based on current tax valuations provided by Scott County, a residential
property valued at $315,900 in 2009 (an average home value in 2009) would
be impacted as follows for taxes imposed by the City of Prior Lake (does not
include the impact of taxes imposed by the county, school district, etc.):
Taxable $ Change based $ Change based Variance from
Valuation % on 0% change in on 2% change in 0% to 2%
Change 09-10 levy levy Change in Levy
I + 2.00% + $ ~:i6.83 + $ 79.75 + $ 22.92
I - 0.50% + $ 28.14 + $ 50.50 + $ 22.36
I - 2.50% +$ 5.19 + $ 27.10 + $ 21.91
I - 6.50% - $ 40.72 - $ 19.70 + $ 21.02
I -10.00% - $ 80.88 - $ 60.65 + $ 20.23
I -13.50% - $121.05 - $ 101.61 + $ 19.44
I -19.00% - $184.17 - $ 165.96 + $ 18.21
The additional cost associated with a 2% levy increase is in the range of $18-
$23 for the average-valued home experiencing valuation changes in the -19%
to +2% range.
As mentioned before, properties throughout the City of Prior Lake experienced
valuation adjustments ranging from a 2% increase to a 30% decrease.
Approximately thirty-nine percent of properties experienced valuation
adjustments in the +2% to -4% range. The remaining sixty-one percent of
properties experienced valuation adjustments in the -5% to -30% range. The
majority of properties (53%) are in the -9% to -11 % range.
If the Council should choose to adopt a proposed levy that remains the same
as 2009 (a 0% change in dollar amount) versus the 2% increase, further
discussion will be needE~d to determine which services must be further reduced
and/or eliminated. The 2% increase, as it stands right now, is funding long-
term capital and infrastructure needs of the City. The majority of those funds
are for increases in debt service which are a legal obligation of the City. Those
increases will have to bl3 offset by other expenditure reductions if the property
taxes are not available as a funding source.
Resolution 09-xxx identifies the funds for which the City approves formal
budgets and the proposed 2010 property tax levy. The resolution also states
that the City will hold a formal Truth in Taxation public hearing to receive
citizen input on the proposed 2010 budget and property tax levy on Monday
December 7, 2009 at 6:00 p.m.
Final budget adoption and property tax levy approval will occur during the
following council meeting on December 21,2009.
AL TERNATIVES:
The following alternatives are available to the City Council:
1. Approve Resolujtion Adopting Proposed 2010 City Budgets and
Certifying Preliminary 2010 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 recommends Alternative #1. The Council may make alternative
adjustments between now and the final levy determination that must be
certified in late December.
Reviewed by:
r;JIi/,/;, ~
f:rank B6yle~, C'ity Manager
ATTACHMENTS:
1. Resolution Adopting Proposed 2010 City Budgets and Certifying Preliminary 2010
City of Prior Lake Property Tax Levy to Scott County Department of Taxation
2. 2010 Proposed Budget Overview
OO~ P,RIO~,
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1rlNNESO'\~/
4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
RESOLUTION 09-xxx
A RESOLUTION ADOPTING PROPOSED 2010 CITY BUDGETS AND CERTIFYING
PRELIMINARY 2010 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, Preliminary budget amounts for the City of Prior Lake for calendar year 2010 are
estimated as follows:
General Fund $ 12,156,839
Water & Sewer Fund 5,858,273
Water Quality Fund 454,786
Transit Fund 1,143,484
Total $ 19,613,382
WHEREAS, The proposed property tax levy for the City of Prior Lake for payable year 2010 is as
follows:
General Purposes
Revolving Equipment Fund
Debt Service
Total
$ 7,020,503
260,000
2,798,683
$ 10,079,186
WHEREAS, The proposed City of Prior Lakl9 property tax levy for the year payable 2010 represents
an increase of 2.0%; and
WHEREAS, The City Council will consider the 2010 General Fund and Enterprise Fund Budgets
and the Final 2010 Property Tax Levy during its regularly scheduled council meeting at
6:00 p.m. on Monday December 7, 2009 at 4646 Dakota Street SE, Prior Lake with a
continuation (if necessary) at 6:00 p.m. on December 21, 2009.
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 2010:
www.cityofpriorlake.com
Phone 952.447.9800 / Fax 952.447.4245
Puroose Amount
* For General City Purposes $ 7,020,503
* Revolving Equipment Fund 260,000
* G.O. Improvement Bonds '01 (Fro~l Town) 55,000
* G.O. Improvement Bonds '04 (BreE~zy Point) 158,000
* G.O. Improvement Bonds '05 (Fish Point) 100,000
* CSAH 82 Improvement Appropriation '06 159,784
* G.O. Street Reconstruction Bonds '07 182,000
* G.O. Improvement Bonds '08 (Brooksville Hills I) 91,000
* G.O. Improvement Bonds '09 (Brooksville Hills II) 139,000
* G.O. Imp Refunding Bonds 2009B 224,000
* G.O. Building Bonds '05 (EDA) 605,000
** Park Refunding Bonds '05 688,019
** Fire Station #2 Referendum Bonds '06 210,880
** Fire Station #1 Refunding Bonds '018 186,000
Total $ 1 O,()79 , 186
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 8th day of September, 2009.
YES
NO
Haugen
Erickson
Hedberg
LeMair
Millar
Haugen
Erickson
Hedberg
LeMair
Millar
City Manager
City of Prior Lake
R\Council\2009 Agenda Reports\09 08 09\Proposed 2010 Budget & Tax Levy Reso!ut!ondoc
CITY OF PRIOR LAKE
2010 Proposed Budget
Total
General WatE!r & Sewer Water Quality Transit Enterprise Budgeted
Fund Fund Fund Fund Funds Funds
Revenues I Sources
Property Taxes
Levy - Tax Capacity $ 7,625,503 $ $ $ $ $ 7,625,503
Levy - Market Value 1,084,899 1,084,899
MVHC Aid (227,546) (227,546)
Special Assessments
Licenses & Permits 251,775 251,775
Fines & Forfeits 222,000 222,000
Intergovernmental 1,392,102 444,661 444,661 1,836,763
Charges for Services 1,342,188 4,617,838 425,000 90,000 5,132,838 6,475,026
Other Revenues 140,918 100,000 100,000 240,918
Bond Proceeds
Transfers 325,000 325,000
Total Revenues I Sources $ 12,156,839 $ 4,717,838 $ 425,000 $ 534,661 $ 5,677,499 $ 17,834,338
Expenditures I Uses
Employee Services $ 6,705,038 $ 1,256,153 $ 160,361 $ 90,028 $ 1,506,542 $ 8,211,580
Current Expenditures 3,302,497 2,463,324 69,425 772,820 3,305,569 6,608,066
Capital Outlay 302,705 24,000 24,000 326,705
Capital Improvements 1,060,000 225,000 280,636 1,565,636 1,565,636
Subtotal $ 10,310,240 $ 4,803,477 $ 454,786 $ 1,143,484 $ 6,401,747 $16,711,987
Transfers to other funds
General Fund $ $ 325,000 $ $ $ 325,000 $ 325.000
Maintenance Building 181,807 181,807 181,807
Treatment Plant 457,989 457,989 457,989
Equipment Fund 90,000 90,000 90,000
Debt Funds 1,677.599 1,677,599
Contingency 169,000 169,000
Subtotal $ 1,846,599 $ 1,054,796 $ $ $ 1,054,796 $ 2,901,395
Total Expenditures I Uses $ 12,156,839 $ 5,858,273 $ 454,786 $ 1,143,484 $ 7,456,543 $19,613,382
Change in Fund Balance $ $ (1,140,435) $ (29,786) $ (608,823) $ (1,779,044) $ (1,779,044)
2010 Proposed Property Tax Levy
I Property Taxes Change 09 - 10
2009 2010 Amount Percent
Levy - Tax Capacity
Budgeted Funds:
General Fund $ 7,590,948 $ 7,625,503 $ 34,555 046%
Non-Budgeted Funds:
Debt Service Funds 1,000,993 1,108,784 107,791 10.77%
Equipment Fund 250,000 260,000 10,000 4.00%
$ 8,841,941 $ 8,994,287 $ 152,346 1.72%
Levy - Market Value 1,039,614 1,084,899 45,285 4.36%
Total Levy $ 9,881,555 $ 10,079,186 $ 197,631 2.00%
09/02/2009