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Home My WebLink About10A 2014 Budgets and Prelim Tax Levy O � PRip� N � V �' 4646 Dakota Street SE Prior Lake, MN 55372 `�INx�so��' CITY COUNCIL AGENDA REPORT MEETING DATE: SEPTEMBER 9, 2013 AGENDA #: 10A PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR PRESENTED BY: JERILYN ERICKSON AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION ADOPTING PROPOSED 2014 CITY BUDGETS AND CERTIFYING PRELIMINARY 2014 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION DISCUSSION: Introduction Minnesota State Statute 275.065 requires that each "taxing authority" adopt a proposed budget and certify a preliminary tax levy for payable 2014 property taxes to the County Department of Taxation on or before September 15, 2013. The attached resolutions fulfill this statutory requirement. The 2009 Legislature made some significant changes to the Truth in Taxation process for 2010 and beyond. At the meeting at which the City Council adopts a proposed budget and tax levy (September 9), the Council must announce the time and place of the council meeting at which the 2014 budget and levy will be discussed and which allows for citizen input (November 25 at 7pm. here in the Prior Lake City Council Chambers). This information must also be included in the meeting minutes. Hi StOry The Council held a workshop on August 12 to discuss and provide direction on the preliminary 2014 tax levy, city budgets and the use of fund balance reserves. Staff presented property tax levy recommendations within the constraints of the levy limit legislation that was approved by the 2013 legislature. From a staff perspective, it appeared that at least four council members were comfortable with this recommendation recognizing that the balance of funding would come from fund balance reserves. Council members directed staff to continue analyzing the need and associated costs for additional personnel and bring that information back at the November budget work session. Council members were open to adding personnel if it was conducive to accomplishing city business requirements and provided an offsetting revenue stream; therefore, a net zero impact to the property tax levy. State Statute 469.107 subd. 1 provides that a city may, at the request of the Economic Development Authority, levy a tax in any year for the benefit of the authority in an amount not to exceed 0.01813 percent of taxable market value. The current maximum levy would be approximately $446,000. The EDA has requested $150,000 for 2014. Phone 952.447.9800 / Fa�c 952.447.4245 / www.cityofpriorlake.com Current Circumstances A copy of the August 12, 2013 council workshop agenda report is attached to this agenda report. It includes a preliminary budget overview, revenue summary (all funds) and expenditure summary (all funds). The preliminary 2014 budget is being presented for the following funds: • General Fund , • Debt Service Funds —includes all debt • Revolving Equipment Fund • Facilities Management Fund • Economic Development Authority • Water Fund • Sewer Fund • Water Quality Fund • Transit Fund Key points articulated during the council workshop regarding the preliminary budgets: • No change in service levels (other than council directives); • No new positions subject to the above statement; • Includes the 2014 capital improvements from the adopted 2014-2018 Capital Improvement Program • Includes the proposed 2014 rate increases as shown in the adopted 2014- 2018 Capital Improvement Program Use of Fund Balance Reserves The preliminary budget reflects a planned use of fund balance reserves in many of the funds for purposes of funding debt service payments, capital replacement, and capital improvements. General Fund reserves are specifically funding the costs associated with short- term incentives to contain healthcare costs as well as other costs that would typically be funded by property taxes if levy limits were not in place. This use of reserves is in compliance with the Comprehensive Financial Management Policy; Tax Levy on a Per Household and Capita Basis The tax levy data shown in the following table on a gross tax levy basis as well as net of the Market Value Homestead Credit (MVHC) basis was presented in a graphical format during the workshop. 2 � zo+��, �� 2t�s �q�b°; zn��' �a�z � „�,��a�� eti�� , Permits $4 62 94 106 174 150 150 Issued Households 8,301 8,385 8,447 8,541 8,647 8,821 8,971 Population 22,431 22,641 22,796 23,031 23,296 23,731 24,106 GCbu�'f�X � � � � � � .. �e�ry �� s�a�� ii�� $�o�� xas . ��t� a�►a.r�� ,��,1�4 ��,��a �� za,ai$ i�i� i�i �� ? , � �� a � �°=� ' Gro�s'i'ax �9 ~128 $1 ��t,t93 �'1; I$4 �$i,tI88 �1,067 `�1,084 ' �e�r �er#HH , , � _ �#�`�, '��`�� "� . � - .. �� , .� �. . — �s ` �*; { _ Gross Tax = �.�vy �418� ��#36 $442 $439� �U4 '- � �397 $403 .1'.��ita �_ ° � � � ' � �h °� - `� _ "�--� i �^ ,,:� `:� i ` i - i�� IM � � � - T�� LeVy � �4 ,��i�i� (�� = N�tof � ; $9,252.437 $9,�i55,b55 ��, $5,85"k,8A0 �5,85�S,6�p6 $5;414,t24 �� $9,414;126 $9.724.918 �� MVHC , Gredit �,« `� i � , ��'I � i� �;7� L�v�r�'erMH �� $�,�15 �1„152 � ��51;9,�6 = �1,Da9 $1,Q67 $1,fl84 � tl� i = - t�le� 7aX ��u � � . � ' � Ii� � � ' � ��vy � $4'42� �426 $432 $4P8' �04 �397 �� $4Q3 �� PeflGapita Household and population figures are based on permits issued in the previous year and a formula of 2.5 persons/household. It should be noted that these numbers (other than the 2010 figures which is based on the U.S. Census) will not coincide with the household and population figures provided by the Met Council; therefore, comparisons with other communities should be undertaken with caution. Truth-in-Taxation Hearing Process As mentioned above, new legislation requires that the City Council announce the time and place of the council meeting at which the 2014 budget and levy will be discussed and which allows for citizen input. This information must be included in the meeting minutes. The public budget meeting for the proposed 2014 budget and tax levy will be held on Monday, November 25, 2013, at 7 p.m. with a continuation hearing to be scheduled for Monday, December 9, 2013, if needed. 3 ISSUES: The attached resolution reflects a proposed 2014 General Fund Budget of $12,481,134 representing a 2.37% increase from the current year original budget of $12,192,316. This increase is primarily due to personnel costs, street maintenance, technology upgrades, and adding the annual $50k transfer from the General Fund to the Revolving Park Equipment Fund (RPEF) thaf was eliminated in the 2013 budget. The preliminary total for all budgeted funds is $28,844,966 representing a 20.36% decrease from the current year original budget of $36,220,430. The decrease is primarily due to additional expenditures that were associated with paying off $9.3 million in refunded bonds with escrowed funds in the 2013 budget. Overall, the proposed tax levy of $9,724,918 is comprised of the following elements: .............................................................................................................................................................................................................................................................................. .. ......... ; Pur ose Amount Chan e ; �_ .................................................................................................................................:...................... ,...... ��..................: :............................................................................................. ;.......................................................................................:.......................................................................................; ; _General .................... . _;.............._$........_ _Revolvin.�.._equi.pment fund ....................... . .:..................................... � Referendum debt levies 1,006,792 ; 29,943 ; ,......CIP s ecial levies_......... � 1.'.915,398 . ..................................._82,713 : :................................P....................................................................................... �........ ................................................. . ..............................................................................� ; ;..._EDA..._Lev.Y _ 150,000 ; 0 ; Total Property Tax Levy ; $ 9,724,918 � $ 310,794 The proposed tax levy of $9,724,918 represents a 3.30% increase from the current year tax levy but is within the state levy limit. The initial property tax levy certification for 2014 as approved this evening may be maintained at this level or adjusted downward by the City Council when the final budget and property tax levy is considered in December. Upon adoption this evening, this or whatever levy amount the Council agrees to for the tax levy becomes the maximum possible for 2014. The staff will be evaluating year end projections and economic and budget conditions in an effort to finalize the budget documents for City Council consideration in November and December. NOTE: Staff received notificafion from the Minnesota Department of Revenue of the levy limit amount for the City of Prior Lake. The amount is higher than what staff had originally calculated. Staff is in the process of verifying this information and will distribute the findings either prior to or at the September 9t'' council meeting. FINANCIAL Attached are two resolutions: IMPACT: 1) The first resolution identifies the funds for which the City approves formal budgets (excluding the Economic Development Authority) and the proposed 2014 property tax levy. The resolution also states that the City will hold a public budget meeting (Truth in Taxation hearing) to receive citizen input on the proposed 2014 budget and property tax levy on Monday November 25, 2013 at 7:00 p.m. 2) The second resolution approves a budget and tax levy for the Economic Development Authority utilizing the EDA's taxing authority. 4 Final budget adoption and property tax levy approval will occur during the following council meeting on December 9, 2013. ALTERNATIVES: The following alternatives are available to the City Council: 1. Approve Resolution Adopting Proposed 2014 City Budgets and Certifying Preliminary 2014 City of Prior Lake Property Tax Levy to Scott County Department of Taxation as submitted. 2. Approve Resolution Adopting Proposed 2014 Economic Development Authority Budget and Certifying Preliminary 2014 Prior Lake Economic Development Authority Tax Levy to Scott County Department of Taxation as submitted. 3. Amend resolutions to an amount determined by the City Council. RECOMMENDED Staff recommends Alternatives #1 and #2. The Council may make alternative MOTION: adjustments between now and the final levy determination that must be certified in late December. ATTACHMENTS: 1. August 12, 2013 Council Workshop Report 5 O � PRlp� F�. � U tr� 4646 Dakota Street SE �INI�7ESO� Prior Lake, MN 55372 RESOLUTION 13-xxx A RESOLUTION ADOPTING PROPOSED 2014 CITY BUDGETS AND CERTIFYING PRELIMINARY 2014 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 2014 are estimated as follows; and General Fund $ 12,481,134 Debt Service Funds 7,195,501 Revolving Equipment Fund 725,356 Facilities Management Fund 371,395 Water Fund 3,048,579 Sewer Fund 2,946,250 Water Quality Fund 796,636 Transit Fund 1,129,544 Total $ 28,694,395 WHEREAS, The proposed property tax levy for the City of Prior Lake for payable year 2014 is as follows; and General Purposes $ 6,452,728 Revolving Equipment Fund 200,000 Debt Service 2,922,190 Total $ 9,574,918 WHEREAS, The proposed property tax levy by tax base for the City of Prior Lake for payable year 2014 is as follows; and Tax Capacity Based Levy $ 8,568,126 Market Value Based Referenda Levy 1,006,792 Total $ 9,574,918 WHEREAS, The proposed City of Prior Lake property tax levy for the year payable 2014 represents a$310,794 or 3.30% increase in total tax levy (excluding the Economic Development Authority levy); and WHEREAS, The City Council will consider the 2014 General Funtl, Debt Service Funds, Revolving Equipment Fund, Facilities Management Fund, EDA Special Revenue Fund and Enterprise Fund Budgets and the Final 2014 Property Tax Levy during its regularly scheduled council meeting at 7:00 p.m. on Monday November 25, 2013 at 4646 Dakota Street SE, Prior Lake with a continuation (if necessary) at 7:00 p.m. on December 9, 2013. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 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 2014: purpose Amount Amount * General City Purposes $ 6,452,728 * Revolving Equipment Fund 200,000 Debt Service: * CSAH 82 Improvement Appropriation '06 $148,840 '` 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) 114,000 * G.O. Improvement Bonds 2010 (CR12) 109,000 * G.O. Improvement Bonds 2011A (Boudins I/Arcadia ROW) 167,000 * G.O. Improvement Bonds (`04) 2011A Refuntling 157,000 * G.O. Improvement Bonds 2011 B(Boudins II/Arcadia) 214,000 * G.O. CIP Refunding Bonds 2012A 574,558 * G.O. Improvement Bontls 2013A (Welcome,CR12,Sunset) 158,000 ** Park Refunding Bonds'05 786,112 ** Fire Station #2 Referendum Bonds'06 220,680 Total Debt Service 2,922,190 Total $ 9,574,918 Note: Single starretl 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 9th DAY OF SEPTEMBER, 2013. YES NO Hedber Hedber Keene Keene McGuire McGuire Morton Morton Souku Souku Frank Boyles, City Manager o � pRro� ti � v �, 4646 Dakota Street SE `�INxESO'� Prior Lake, MN 55372 RESOLUTION 13-xxx A RESOLUTION ADOPTING PROPOSED 2014 ECONOMIC DEVELOPMENT AUTHORITY BUDGET AND CERTIFYING PRELIMINARY 2014 ECONOMIC DEVELOPMENT AUTHORITY 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, State Statute 469.107 subd. 1 provides that a city may, at the request of the Economic Development Authority, levy a tax in any year for the benefit of the authority in an amount not to exceed 0.01813 percent of taxable market value; and WHEREAS, The maximum allowable EDA property tax levy for payable year 2014 has been determined to be approximately $446,000; and WHEREAS, The Prior Lake EDA, at its regularly scheduled meeting of August 19, 2013, authorized a 2014 tax levy for economic development purposes in the amount of $150,000 and a 2014 budget of $150,571. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. A preliminary tax levy of $150,000 and proposed budget of $150,571 are approved for payable year 2014. 3. That the proposed Economic Development Authority tax levy be distributed upon the taxable property in said City for the purposes of economic development in payable 2014. PASSED AND ADOPTED THIS 9th DAY OF SEPTEMBER, 2013. YES NO Hedber Hedber Keene Keene McGuire McGuire Morton Morton Souku Souku Frank Boyles, City Manager