HomeMy WebLinkAbout9A 2020 Preliminary Budget and Tax Levy Report
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: SEPTEMBER 16, 2019
AGENDA # 9A
PREPARED BY: LORI OLSON, INTERIM CITY MANAGER
CATHY ERICKSON, FINANCE DIRECTOR
JASON ETTER, ACCOUNTING MANAGER
PRESENTED BY: CATHY ERICKSON
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION APPROVING PRELIMINARY
2020 CITY BUDGETS AND CERTIFYING PRELIMINARY 2020 CITY OF
PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT
OF TAXATION
GOAL AREA AND
OBJECTIVE:
High-Value City Services
1. Establish financial stability for all funds.
2. Design a comprehensive funding strategy for capital needs.
3. Ensure sufficient resources and staffing to meet service demands.
DISCUSSION: Introduction
State statutes require that each taxing authority adopt a preliminary budget
and certify a preliminary tax levy for payable 2020 to the County on or before
September 30, 2019. The preliminary tax levy establishes the maximum that
the City can levy against properties in 2020.
The City’s tax levy is used (together with the preliminary levies of other taxing
entities) to assemble the parcel-specific truth in taxation notices for mailed
distribution in November prior to the public budget meetings in December.
At the meeting at which the City Council adopts a preliminary budget and
preliminary tax levy (September 16), the Council must announce the date, time
and place of the Council meeting and Public Hearing at which the final 2020
budget and levy will be discussed.
That meeting is scheduled for Monday, December 2 at 7 p.m. in the Prior Lake
City Council Chambers. This information must also be included in the meeting
minutes.
History
The following budget development meetings have been held. The impact of
these updated plans on the debt balance, tax levy, fund balance reserves and
utility rates were a part of the Council and staff discussion at these meetings.
May 20 Long Range Financial Plan work session
June17 & July 15 CIP work session
August 5 & Sept.3 Budget work session
August 12 & Sept. 9 EDA meeting budget discussions
Page 2
Current Circumstances
Budget Overview
A budget overview is attached to this agenda report as Attachment 1 and
reflects proposed amounts for the 2020 budget for the following funds:
• General Fund
• Debt Service Funds
• Cable Fund
• Capital Park Fund
• Revolving Equipment Fund
• Revolving Park Equipment Fund
• Permanent Improvement Revolving Fund
• Facilities Management Fund
• Economic Development Authority
• Water Fund
• Sewer Fund
• Water Quality Fund
The second page shows tax levy and budgetary comparisons from the 2019
adopted budget to the proposed 2020 figures.
2020 Preliminary Tax Levy:
At the 9/3/19 City Council work session, Council provided direction to staff in
setting the preliminary tax levy at $13,797,737, which is a 7.98% increase from
the prior year levy. A significant discussion point was setting the preliminary
tax levy at a level that allows the Council flexibility to consider our funding
options for strategic initiatives that include the Economic Development
Authority (EDA), trail/sidewalk replacement and street infrastructure.
Based on Council feedback and direction, the following adjustments were
made to the budget:
• Include the website redesign in the budget, but funding should come
from general fund reserves not tax levy. ($40k levy reduction)
• The 40 hour/week seasonal schedule Sand Point beach manager
position was removed from the 2020 budget. Based on area resident
input in the form of a petition, Council directed staff to add back the
position at a reduced 24 hour/week seasonal schedule. ($5.8k levy
increase)
• Increased the seasonal dock slip rental fee from $3,300 to $3,700 per
boat slip as this is comparable to the rates charged by private
businesses. The proposed residential boat slip fee is $3,700 for
residents and $5,000 for non-residents. The revenue budget is
conservatively set at the resident rate as the resident/non-resident split
is not know at this time. ($3.2k levy reduction)
The net impact of these adjustments is a reduction in the proposed tax levy by
$37.4k (.29%) from the amount proposed at the 9/3 budget work session.
Page 3
Estimated Tax Levy Detail
The tax levy impact of the 2020 operating budget, EDA and CIP are shown on
the chart below. The 2020 tax levy change has been summarized by the
changes needed to maintain current service levels and the changes needed
to enhance current service levels. See attachment 2 for specific details of the
components of the proposed 2020 tax levy change.
FINANCIAL
IMPACT:
The total proposed preliminary tax levy change is a 7.98% increase from
the prior year. For 64% of the homes in Prior Lake, this will result in a
tax increase of about 2.4% or less for the city portion of property tax.
The following chart shows the detailed change in the property tax levy for 2020
based on the preliminary budgets presented to the Council tonight.
It also shows that proposed change in the city tax rates (tax capacity and
market value). Both tax rates show a planned reduction in 2020 based on
the preliminary tax levy proposed. This is because the tax levy is spread
across a larger base due to the city’s growth in tax capacity and market value.
Page 4
One of the key metrics the City Council targets during the budget process is to
“maintain a level of property taxes on a per household basis which takes into
account the cost of inflation and community growth.”
Our base property tax levy consideration is as follows:
Growth (New Construction) 2.5%
CPI-U (MSP) 2.4%
Debt Service* 1.0%
Base Property Tax Levy Considerations 5.9%
*The debt service % change is already determined as the Council has approved the
2019 bond issue.
The following chart illustrates the total property tax levy on a per household
basis.
Adopted
Budget 2019
Proposed Budget
2020
TAX LEVIES
General Fund 8,146,555 8,731,199
Debt Service Fund 3,497,188 3,561,288
Equip Revolving Fund 600,000 625,000
Revolving Park Equip Fund 289,292 409,000
EDA Fund 150,000 311,250
PIR (Street Overlay) Fund 95,000 130,000
Facilities Mgmt Fund - 30,000
Total Tax Levies 12,778,035 13,797,737
SUMMARY OF CHANGE IN TAX LEVIES
General Fund 367,373 584,644
Debt Service Fund 127,017 64,100
Equip Revolving Fund 50,000 25,000
Revolving Park Equip Fund 51,108 119,708
EDA Fund 10,000 161,250
PIR (Street Overlay) Fund 95,000 35,000
Facilities Mgmt Fund - 30,000
TOTAL $ CHANGE IN TAX LEVIES 700,498 1,019,702
CURRENT YEAR TAX LEVIES ANNUAL % CHANGE
General Fund 4.7%7.18%
Debt Service Fund 3.8%1.83%
Equip Revolv Fund 9.1%4.17%
Revolv Park Equip Fund 21.5%41.38%
EDA Fund 7.1%107.50%
PIR Fund 36.84%
Facilities Mgmt Fund
TOTAL % CHANGE IN TAX LEVIES 5.80%7.98%
TAX CAPACITY TAX RATE 33.020%32.852%
Annual % Change -0.06%-0.51%
MARKET VALUE TAX RATE 0.006768%0.006480%
Annual % Change -2.24%-4.25%
Page 5
As reflected in the chart, the preliminary 2020 total tax levy/household is higher
than the level which reflects the combined annual cost of inflation and growth.
Our request of 7.98% for the property tax levy change above the 5.9% base
property tax consideration is for funding for strategic initiatives for
trail/sidewalk replacement (.70%) and additional funding for the EDA (1.74%)
Another key metric the City Council targets is to “maintain a level of General
Fund operational expenditures on a per household basis which considers the
cost of inflation and community growth.”
The following chart illustrates General Fund operating expenditures on a per
household basis from 2010 to the preliminary 2020 budget:
As reflected in the chart above, the preliminary 2020 operating expenditures
per household continues to be less than the level which reflects the cost of
inflation and growth.
Page 6
ISSUES:
Residential Impact of the City Tax Levy
The table below shows the estimated annual increase in the city portion of
property tax for an Average-$349,600, $600,000 and $900,000 valued home.
About 54% of city homeowners had a market value increase of .01-5.00%. For
an average valued home, those home owners would see a 2.2% increase in
the city portion of their taxes. Owners of $600,000 and $900,000 valued
homes would see 2.4% AND 2.3% respectively.
Strategic Initiatives:
Based on Council feedback, staff has identified areas where additional funding
is needed to increase our current level of service.
EDA: The EDA has requested additional funding of $322,500 to help achieve
economic development initiatives including loans and subsidies to assist with
commercial development and expansion. The assistance provided by the City
Council and EDA in recent years to support business development, retention
and expansion has helped the city achieve its stated public purpose objectives:
➢ To retain local jobs and/or increase the number and diversity of jobs that
offer stable employment and/or attractive wages and benefits.
➢ To enhance and diversify the City of Prior Lake’s tax base.
➢ To encourage additional unsubsidized private development in the area,
either directly or indirectly, through “spin-off” development.
➢ To achieve development on sites that may not be developed without
business subsidies assistance.
➢ To remove blight and/or encourage development of commercial and
industrial areas in the city that result in higher quality development or
redevelopment and private investment.
➢ To offset increased costs of development for specific properties when the
unique physical characteristics of the site may otherwise preclude private
investment.
The city has added nearly 330,000 square feet of new commercial/industrial
property to the city over the past few years in part due to the support of the
EDA.
RESIDENTIAL IMPACTS
% Net Net Net Net Net Net
of Inc/Dec Difference Inc/Dec Difference Inc/Dec Difference
Inc/Dec Total 19 vs 20 % Change 19 vs 20 % Change 19 vs 20 % Change
+15.01+%498 5%184.38$ 16.2%363.16$ 17.6%543.69$ 16.5%
+10.01-15.00%545 6%152.52$ 13.4%300.59$ 14.6%449.84$ 13.6%
+5.01-10.00%2,215 24%88.79$ 7.8%175.45$ 8.5%262.13$ 7.9%
+0.01-5.00%4,937 54%25.07$ 2.2%50.32$ 2.4%74.42$ 2.3%
No Change 13 0%(6.80)$ -0.6%(12.25)$ -0.6%(19.43)$ -0.6%
-0.01-5.00%685 8%(38.66)$ -3.4%(74.82)$ -3.6%(113.28)$ -3.4%
-5.01 - 10.00%160 2%(102.38)$ -9.0%(199.96)$ -9.7%(300.99)$ -9.1%
-10.00 - 15.00%9 0%(166.11)$ -14.6%(325.10)$ -15.8%(488.70)$ -14.8%
-15.01% +7 0%(197.97)$ -17.4%(387.67)$ -18.8%(582.55)$ -17.6%
9,069 100%
AVG MV- $349,600 $600,000 HOME $900,000 HOME
% EMV Value Range
# of
affected
Properties
Page 7
This new commercial and industrial square footage results in an estimated
$120,000+ in annual property tax payments to the City of Prior Lake. That
equates to almost 1% of our tax levy annually that is paid by this new
commercial tax base that has been recently added. The city is striving to
increase this commercial tax base and the additional funding request would be
used to this end.
Trail/Sidewalk Replacement: Additional funding for Parks trail/sidewalk
replacement -$90k. The Revolving Park Plan proposes an increase in the tax
levy for trail/sidewalk replacement of $100,000 annually until 2023 when the
levy is proposed at $300,000. Our trail replacement is not adequately funded
under the current plan. One mile of trail replacement costs about $425,000.
The proposed tax levy includes one-time funding of $90k to work toward
meeting our funding needs. A Master Parks Plan study is underway and will
include trail replacement needs and funding alternatives.
Street Infrastructure Costs: A court challenge of the statutory basis for
infrastructure development fees has eliminated the city’s ability to charge a
street infrastructure/impact fee. The city has relied on these street impact fees
to provide funding for street infrastructure needed for new development.
Without this revenue, the city is facing a significant infrastructure financing
shortfall. We estimate that the gap may be as high as $30 million to build out
our transportation system required to support development once we are 100%
developed. The Council, in conjunction with staff, is evaluating our options to
finance these infrastructure costs. One of the options is to begin funding a
portion of the future anticipated cost through the tax levy, similar to how we
fund our other long-term capital plans such as equipment replacement. Staff
has not included any funding for this in the tax levy as proposed, however, the
Council has set the preliminary levy at an amount that would allow us the
flexibility to consider such funding as we continue the 2020 budget process.
General Fund:
The city’s 2020 labor contracts have an open rider for health plan contributions.
The proposed 2020 budget will be revised as updated labor contract
negotiation information becomes available.
General Fund Reserves:
The city’s comprehensive financial management plan calls for maintaining a
fund balance between 40%-50%. Council has provided direction to maintain
the city’s General Fund balance at 46% to ensure adequate reserves for cash
flow, unplanned expenditures and to maintain the city’s credit worthiness as
evidenced by our AA+ credit rating. The 2020 proposed use of General Fund
Business Address New SF
Versatile Vehicles, Inc. 17136 Adelmann St. SE 58,650
Pro Service Auto Repair 16921 Panama Ave. SE 6,590
Blahnik Law Office 4617 Colorado St. SE 2,700
Universal Motors 16720 Welcome Ave. SE 15,000
Select Space Self-Storage 4400 Fountain Hills Dr. NE 92,600
Prior Lake Revival 16250 Duluth Ave. SE 12,400
SDDI Sign Systems 5702 Graystone Ct. SE 10,000
Port City Bakery 5832 Industrial Lane SE 45,000
PLate on Main 16323 Main Ave SE 3,900
Berens Bus 16765 Welcome Ave. SE 5,676
Rainbow Child Care 5565 Credit River Road SE 10,782
Iron Clad Self-Storage 17230 Adelmann St. SE 66,424
Page 8
reserves is $201k for EDA funding transfer (161k) and redesign of the city’s
website (40k). Our estimated 2020 reserve balance will be 44.4% based on
proposed use of reserves. This is within the guideline of the comprehensive
plan, but below Council direction to maintain the reserve at 46%. The reserve
percentage will be reviewed as we progress through the year. For example, if
2019 results are favorable to budget, the reserve percentage would increase.
Enterprise Funds
The budget summaries of the three enterprise funds that the City operates are
included on Attachment 3. At the City Council work session on July 15, staff
presented rate increases necessary to fund operations as well as capital
projects identified in the Capital Improvements Plan. For example, in the
approved Transportation Plan, there are $4.7 million of water projects, $3.2
million of sewer projects, and $1.9 million of water quality projects planned
over the next five years. Based on Council direction, the timing of projects has
been adjusted to manage the number of streets under reconstruction within
the next year and moderate the impact on the tax levy and utility user rates.
The projects slated for 2020 and 2021 included utility replacements. By
shifting the projects to future years, the utility funds will build reserves in
preparation of the significant utility replacement work and the projected debt
issuance in 2021 has been reduced from $1.5M to $750,000. The goal is to
reduce the annual impact on the water and sewer funds for the full
reconstruction projects. An annual rate increase is reflected in the water,
sewer and storm water budgets and will be presented to the Council for
approval as part of the final budget and 2020 fee schedule adoption in
December.
ALTERNATIVES: 1. Approve resolution adopting preliminary budgets and setting maximum
levies as set forth in the resolution.
2. Approve the resolution modified to adjust certain expenditures and the
programs they support.
3. Take no action and establish last year’s levy as this year’s maximum.
RECOMMENDED
MOTION:
ATTACHMENTS:
Alternative #1
1) September 16, 2019 Council Resolution – 2020 Preliminary Budget
and Tax Levy;
2) Attachment 1 – Budget Overview
3) Attachment 2 – Components of 2020 Proposed Tax Levy Change
4) Attachment 3 – Revenue and Expenditure Summaries
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 19-106
A RESOLUTION ADOPTING 2020 CITY BUDGETS AND CERTIFYING
PRELIMINARY 2020 CITY OF PRIOR LAKE PROPERTY TAX LEVY
TO SCOTT COUNTY DEPARTMENT OF TAXATION
Motion By: Second By:
WHEREAS, State statute requires that the Prior Lake City Council 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 2020 are
estimated as follows; and
General Fund $ 14,635,111
Debt Service Funds 5,432,317
Cable Fund 9,200
Capital Park Fund -
Revolving Equipment Fund 1,200,000
Revolving Park Equipment Fund 346,000
Permanent Improvement Revolving Fund 979,933
Facilities Management Fund 114,000
EDA 489,635
Water Fund 3,402,180
Sewer Fund 3,560,641
Water Quality Fund 819,861
Total $ 30,988,878
WHEREAS,
The proposed property tax levy for the City of Prior Lake for payable year 20 20 is as
follows; and
General Purposes $ 8,731,199
Revolving Equipment Fund 625,000
Revolving Park Equipment Fund 409,000
Permanent Improvement Revolving Fund 130,000
Facilities Management Fund 30,000
EDA 311,250
Debt Service 3,561,288
Total $ 13,797,737
WHEREAS,
The proposed property tax levy by tax base for the City of Prior Lake for payable year
2020 is as follows; and
Tax Capacity Based Levy $ 13,555,680
Market Value Based Referenda Levy 242,057
Total $ 13,797,737
WHEREAS,
The proposed City of Prior Lake property tax levy for the year payable 2020 represents
a $1,019,702 or 7.98% increase in total tax levy (including the Economic Development
Authority levy); and
The City Council will consider the 2020 General Fund, Debt Service Funds, Cable
Fund, Capital Park Fund, Revolving Equipment Fund, Revolving Park Equipment Fund,
Permanent Improvement Revolving Fund, Facilities Management Fund, EDA Special
Revenue Fund and Enterprise Fund Budgets and the Final 2020 Property Tax Levy
during its regularly scheduled council meeting at 7:00 p.m. on Monday December 2,
2019 at 4646 Dakota Street SE, Prior Lake with a continuation (if necessary) at 7:00
p.m. on December 16, 2019.
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 2020:
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.
Purpose Amount Amount
* General City Purposes 8,731,199
* Revolving Equipment Fund 625,000
* Revolving Park Equipment Fund (Park Equipment & Trail Replacement) 409,000
* Permanent Improvement Revolving Fund (Street Overlay) 130,000
* Facilities Management Fund 30,000
* EDA 311,250
Debt Service:
* F557-G.O. Imp Bonds 2010 (CR12) 124,000
* F558-G.O. Imp Bonds 2011A (Boudin I/Arcadia ROW) 167,000
* F559-G.O. Imp Bonds 2011B (Boudins II/Arcadia) 181,000
* F317-G.O. CIP Refunding Bonds 2012A 663,158
* F560-G.O. Imp Bonds 2013A (Welcome, CR12, Sunset) 170,000
* F561-G.O. Imp Bonds 2014A (Maplewood, Crest, Carriage) 160,500
* F562-Guaranteed Energy Savings Program 300,614
* F564-G.O. Imp Bonds 2015B (150th/13) 124,382
* F565, 566, 567-G.O. Imp Bonds 2016A (Manitou) 76,904
* F566-G.O. Imp Bonds 2016A (150th/13) 42,000
* F567-G.O. Imp Bonds 2016A (Equipment) 68,040
* F568-G.O. Imp Bonds 2017A (Cates, Balsam, Franklin, Sycamore) 325,889
* F569-G.O. Imp Bonds 2017A (Mill and Overlay) 629
* F570-G.O. Imp Bonds 2018A (Equip, CIP, Imp, Street Recon) 684,623
* F571-G.O. Imp Bonds 2018A (Mill and Overlay) 6,190
* F572-G.O. Imp Bonds 2019A (Street and Capital Improvements) 224,302
** F318-Fire Station #2 Referendum Bonds ‘06 242,057
Total Debt Service 3,561,288
Total $ 13,797,737
VOTE Briggs Thompson Burkart Braid Erickson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Lori Olson, Interim City Manager
City of Prior Lake 2020 Council Meeting 9/16/2019
2020 Budget Attachment 1
Budgeted Funds
Debt Capital Revolving Revolving Park Permanent Facilities Total Total
General Service Cable Park Equipment Equipment Improvement Management EDA Governmental Water Sewer Water Quality Enterprise Budgeted
Fund Funds Fund Fund Fund Fund Revolving Fund Fund Funds Fund Fund Fund Funds Funds
Revenues / Sources
Property Taxes
Levy - Tax Capacity 8,731,199$ 3,319,231$ -$ -$ 625,000$ 409,000$ 130,000$ 30,000$ 311,250$ 13,555,680$ -$ -$ -$ -$ 13,555,680$
Levy - Market Value 242,057 - - - - - - 242,057 - - - - 242,057
MVHC Aid - - - - - - - - - - - - -
Special Assessments - 488,995 - - - 305,390 - - 794,385 - - - - 794,385
Licenses & Permits 834,439 - - - - - - 834,439 - - - - 834,439
Fines & Forfeits - - - - - - - - - - - - -
Intergovernmental 2,105,816 - - - - - - 2,105,816 - - - - 2,105,816
Charges for Services 1,802,750 - 32,000 531,200 - - 9,575 2,375,525 4,469,742 4,293,330 1,166,677 9,929,749 12,305,274
Other Revenues 247,700 57,400 - 26,800 19,000 9,000 6,477 9,000 7,560 382,937 42,000 41,000 11,600 94,600 477,537
Bond Proceeds - - - - 115,000 490,000 - - 605,000 - .- 605,000
Lease Proceeds - - - - - - - - - -
Transfers From Other Funds - -
General Fund - 241,768 - - - - 161,250 403,018 - - - - 403,018
Debt Service Funds 110,000 110,000 - 110,000
Water Fund 202,110 554,050 - - 80,000 87,000 - 923,160 - - - - 923,160
Sewer Fund 202,110 - - - 80,000 12,000 - 294,110 - - - - 294,110
Water Quality Fund 65,780 - - - 20,000 - - 85,780 - - - - 85,780
Trunk Reserve Fund - - -
TIF Fund - 28,895 - - - - - 28,895 - - - - 28,895
PIR Fund 279,933 279,933 279,933
Facilities Management Fund - - - - - - - - - - - - -
Capital Park Fund - -
Police Forfeiture Fund - - -
Total Revenues / Sources 14,433,961$ 5,080,272$ 32,000$ 558,000$ 939,000$ 418,000$ 931,867$ 138,000$ 489,635$ 23,020,735$ 4,511,742$ 4,334,330$ 1,178,277$ 10,024,349$ 33,045,084$
Expenditures / Uses
Employee Services 10,036,152$ -$ -$ -$ -$ -$ -$ 132,913$ 10,169,065$ 818,511$ 809,526$ 359,081$ 1,987,118$ 12,156,183$
Current Expenditures 4,127,622 - 1,200 - - - 700,000 - 355,722 5,184,544 1,315,955 2,056,847 300,000 3,672,802 8,857,346
Capital Outlay 68,319 - 8,000 1,200,000 346,000 1,000 1,623,319 130,104 71,208 201,312 1,824,631
Capital Improvements - - - - - - 114,000 - 114,000 40,000 154,500 75,000 269,500 383,500
Subtotal 14,232,093$ -$ 9,200$ -$ 1,200,000$ 346,000$ 700,000$ 114,000$ 489,635$ 17,090,928$ 2,304,570$ 3,092,081$ 734,081$ 6,130,732$ 23,221,660$
Transfers To Other Funds
General Fund -$ -$ -$ -$ -$ -$ -$ -$ 202,110$ 202,110$ 65,780$ 470,000$ 470,000$
Treatment Plant (Debt)- - - - - - - - 554,050 - - 554,050 554,050
Equipment Fund - - - - - - - - 80,000 80,000 20,000 180,000 180,000
Park Equipment Fund - - - - - - - - - - - - -
Debt Service Funds 241,768 110,000 - - - 279,933 - - 631,701 - - - - 631,701
PIR Fund - - -
Facilities Management Fund - - - - - - - - 87,000 12,000 - 99,000 99,000
EDA Fund 161,250 - - - - - - 161,250 - - - - 161,250
Severance Compensation Fund - - -
Contingency - - - - - - - - - - - - -
Debt Service 5,322,317 - - - - - 5,322,317 174,450 174,450 - 348,900 5,671,217
Subtotal 403,018$ 5,432,317$ -$ -$ -$ -$ 279,933$ -$ -$ 6,115,268$ 1,097,610$ 468,560$ 85,780$ 1,651,950$ 7,767,218$
Total Expenditures / Uses 14,635,111$ 5,432,317$ 9,200$ -$ 1,200,000$ 346,000$ 979,933$ 114,000$ 489,635$ 23,206,196$ 3,402,180$ 3,560,641$ 819,861$ 7,782,682$ 30,988,878$
Change in Fund Balance (201,150)$ (352,045)$ 22,800$ 558,000$ (261,000)$ 72,000$ (48,066)$ 24,000$ -$ (185,461)$ 1,109,562$ 773,689$ 358,416$ 2,241,667$ 2,056,206$
2019 Property Tax Levy Comparison 2020 Council Meeting 9/16/2019
Change 19 - 20
Property Taxes 2019 2020 Amount Percent
Levy - Tax Capacity
General Fund - Operating 8,146,555$ 8,731,199$ 584,644$ 7.18%
Debt Service Funds 3,262,770 3,319,231 56,461 1.73%
Revolving Equipment Fund 600,000 625,000 25,000 4.17%
Revolving Park Equipment Fund 289,292 409,000 119,708 41.38%
Permanent Improvement Revolving Fund 95,000 130,000 35,000 36.84%
Facilities Management Fund - 30,000 30,000 n/a
Levy - Economic Dev Authority 150,000 311,250 161,250 107.50%
12,543,617 13,555,680 1,012,063 8.07%
Levy - Market Value - General Fund 234,418 242,057 7,639 3.26%
Total Levy 12,778,035$ 13,797,737$ 1,019,702$ 7.98%
-
2020 Budget Expenditure Comparisons (2019 Original Budgets)
Capital Revolving Revolving Park Permanent Facilities Total Total
General Debt Service Cable Park Equipment Equipment Improvement Management EDA Governmental Water Sewer Water Quality Enterprise Budgeted
Fund Funds Fund Fund Fund Fund Revolving Fund Fund Funds Fund Fund Fund Funds Funds
2020 Total Expenditures / Uses 14,635,111$ 5,432,317$ 9,200$ -$ 1,200,000$ 346,000$ 979,933$ 114,000$ 489,635$ 23,206,196$ 3,402,180$ 3,560,641$ 819,861$ 7,782,682$ 30,988,878$
2019 Total Expenditures / Uses 13,554,319$ 5,480,327$ 17,805$ 470,000$ 1,149,336$ 289,292$ 886,933$ 89,963$ 149,817$ 22,087,792$ 5,257,031$ 3,598,410$ 1,001,502$ 9,856,943$ 31,944,735$
Change 2018 to 2019 ($)1,080,792$ (48,010)$ (8,605)$ (470,000)$ 50,664$ 56,708$ 93,000$ 24,037$ 339,818$ 1,118,404$ (1,854,851)$ (37,769)$ (181,641)$ (2,074,261)$ (955,857)$
Change 2018 to 2019 (%)7.97%-0.88%-48.33%n/a 4.41%19.60%n/a 26.72%226.82%5.06%-35.28%-1.05%-18.14%-21.04%-2.99%
2020 Budget Expenditure Comparisons (2019 Amended Budgets)
Capital Revolving Revolving Park Permanent Facilities Total Total
General Debt Service Cable Park Equipment Equipment Improvement Management EDA Governmental Water Sewer Water Quality Enterprise Budgeted
Fund Funds Fund Fund Fund Fund Revolving Fund Fund Funds Fund Fund Fund Funds Funds
2020 Total Expenditures / Uses 14,635,111$ 5,432,317$ 9,200$ -$ 1,200,000$ 346,000$ 979,933$ 114,000$ 489,635$ 23,206,196$ 3,402,180$ 3,560,641$ 819,861$ 7,782,682$ 30,988,878$
2019 Total Expenditures / Uses 13,619,154$ 5,480,327$ 17,805$ 470,000$ 1,560,506$ 355,292$ 886,933$ 149,963$ 149,817$ 22,689,797$ 5,756,751$ 4,098,130$ 1,001,502$ 10,856,383$ 33,546,180$
Change 2018 to 2019 ($)1,015,957$ (48,010)$ (8,605)$ (470,000)$ (360,506)$ (9,292)$ 93,000$ (35,963)$ 339,818$ 516,399$ (2,354,571)$ (537,489)$ (181,641)$ (3,073,701)$ (2,557,302)$
Change 2018 to 2019 (%)7.46%-0.88%-48.33%-100.00%-23.10%-2.62%10.49%-23.98%226.82%2.28%-40.90%-13.12%-18.14%-28.31%-7.62%
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2020 Proposed Tax Levy Components
LEVY CHANGE TO MAINTAIN CURRENT SERVICE LEVELS – 5.54%
Mandatory Items - 4.6 %
Staffing
Wage/COLA and Benefits - $484,000
Labor agreements negotiated through 2020 include 3% cost of living adjustment and health insurance premium
contribution increase. Includes seasonal salaries.
Part-time (.7FTE) IT Support Specialist -$54,000 The city has over 192 computer devices (work stations, lap tops, tough books), 14 servers, mobile devices, the phone
system, printers/copiers, and seven city buildings with technology infrastructure that need to be managed. This is in
addition to software contracts, license agreements, device accounts, IT policies and procedures, long-term planning
and critical cyber security monitoring and training. At the same time, the technology needs of the police department
continue to expand, including body cameras, squad car cameras, ticket printers, transcription software, evidence/jail
cameras, etc. The volume of the workload is too much for one individual to manage and requires regular weekend
and over-night work. To meet the needs of the city, and in particular the police department, the budget includes the
addition of a part-time IT Support Specialist. This position would primarily serve the police department and provide
help-desk back up to the IT Coordinator.
Workers Compensation - $47,000
Premium adjustment based on updated experience modifier and rate changes from the League of MN Cities.
Increase in firefighter hourly wage -$38,000 The 2020 preliminary budget includes a pay increase for Prior Lake’s paid on -call (POC) Firefighters from $12.20 to
$14.10 per hour. The last wage increase occurred in 2016. Recruitment and retention are serious issues for paid on-
call Fire Departments throughout Minnesota. Calls occur 24 hours a day, 7 days a week, often at inconvenient times,
which is especially difficult on firefighters with regular full-time jobs. In addition, training requirements are significant
and demand more time away from home and work. The average wage of metro area POC firefighters was $14.06 in
2019. The rationale behind a pay increase includes: 1) offering an hourly wage comparable to other area Fire
Departments, 2) recruiting new firefighters, and 3) incentivizing current firefighters to stay. Also included is a yearly
salary increase for Fire officers, including $2,000 to $3,000 for Fire Captains, $5,000 to $6,000 for two Assistant
Chiefs, and $6,000 to $8,000 for one Assistant Chief of Training.
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Pension Contribution Increase - $20,000
Mandated by the state legislature to meet unfunded pension obligations, cities are required to increase Statutory
Public Employees Retirement Association (PERA) Contribution for Police/Fire contributions (rate change from 16.95%
to 17.7%).
Public Safety
Police Department - $86,000 The Police Department has requested a total of $86,000 to fund public safety needs, including:
• Police evidence room camera/video equipment upgrade - $37,000
• Police costs for personnel testing, recruiting, and training/education – $26,000
• Replacement costs for expired police vests and training suits - $23,000
Contracted Services Increases
Assessing Services - $14,000 The City of Prior Lake contracts with Scott County to provide property assessment services. The increase for 2020
includes increasing assessment workloads such as parcel creations, new home construction, and annexation activities.
Central Garage - $14,000 Increased funding for contracted repairs and maintenance including body repairs, windshield replacement, front -end
alignments, and diagnostics that cannot be completed in-house.
Facilities Cleaning Contract - $17,000
The contract rates for the services to clean City buildings increased during this year’s bid process from the previous
contract.
IT Software service contracts - $14,000
Increases for annual software service and licensing costs for Blue Beam plan review software, CIP reporting software,
and new phone system software.
Park trail and sidewalk maintenance - $25,000
The cost for materials related to trail and sidewalk maintenance has increased, primarily for sealing coating.
Joint Powers Agreement (JPA) for street
management - $60,000
Street pavement management cost increases for the JPA contract for chip seal/crack seal/striping and for salt/ice
management materials
Other
Elections Administration - $34,000 In 2020, the State of Minnesota will hold a presidential primary for the first time which will be administered by the
city for Prior Lake citizens. In addition, the city will take over absentee voting from Scott County. Both these changes
require additional election judge staffing and supplies to execute.
Debt Service - $64,000
For council approved 2019 projects, including Fish Point Road, CR21 and fire tanker.
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General Fund Reserve Replenishment
General fund reserve net replenishment is
$81,000 comprised of the following items:
$ 282,000 Replenish 2019 use of reserves
(161,000) 2020 use of reserve to fund EDA
(40,000) 2020 use of reserve to fund website
$ 81,000 Net replenishment of reserves
The city’s comprehensive financial management plan calls for maintaining a fund balance between 40-50% to ensure
adequate reserves for cash flow, unplanned expenditures, and to maintain the city’s credit worthiness (AA+ credit
rating). Staff recommends replenishment of fund balance for the use of reserves; otherwise, the fund balance could
drop below the level stated in the comprehensive financial management plan over time. The use of reserves in 2019
was for the city’s document center software, funding for street overlay , and a transfer to the EDA. The 2020
preliminary budget includes the use of reserves for a planned transfer to the EDA ($161,000) and for the redesign of
the city’s website ($40,000). Council has provided direction to fund these expenditures from General Fund reserve to
reduce the 2020 tax levy impact. The budget does not include replenishing the reserve for these items.
Revenue Additions
New Revenue - $504,000 Planned revenue increases include contracted services for Police, Fire, and Parks; building and plan check fees; park
shelter rental; dock rental; and tower leases. Based on Council direction, staff proposes to eliminate the overnight
rental of dock slips and increase the total number of seasonal slip rentals from 8 to 16 (eight per beach) which will
add $31.2k in revenue.
Capital Improvement Program (CIP) Tax Levy Components - .94%
Street Overlay funding -$35,000
The CIP reflects 3 to 4 miles of street overlay annually. The City will bond for the special assessment portion of the
cost and fund the remainder with prepayments of special assessments collected from prior year(s) improvements and
an annual tax levy. The fund will be reviewed annually to monitor cash flow and determine the tax levy needed.
Facilities Management Plan funding -$30,000
The Facility Management Plan (FMP) was developed to plan for major repairs, replacements and upgrades for all city
facilities on a long-term basis (25 years). It does not cover minor expenses for repairs and maintenance. Those will
continue to be funded through the operating budgets. 2020 expenditures include the library and Club Prior carpet
replacement.
Trail Replacement funding -$30,000 The Revolving Park Plan proposes an increase in the tax levy for trail/sidewalk replacement of $100,000 annually until
2023 when the levy is proposed at $300,000. Trail replacement is not adequately funded under the current plan to
maintain the city’s current trail system. One mile of trail replacement costs about $425,000. A Master Parks Plan
study is underway and will include trail replacement needs and funding alternatives. The Revolving Park Plan does not
cover minor expenses for repairs and maintenance. Those will continue to be funded through the Parks operating
budget.
4
Equipment Replacement funding - $25,000 The Equipment Replacement Plan (ERP) utilizes general tax levies to support replacement of the City’s equipment and
vehicle fleet. Prior CIP plans reflected incremental annual increases over the program’s 12-year term. The ten-year
annualized cost for the plan is about $1M. The financing plan has been revised to reflect a gradual increase in the tax
levy until the annual levy reaches $1M by the year 2032. The proposed total levy for 2020 is $625k. Since the
proposed levy increase is gradual, bonding may be required for the plan to meet our funding needs.
LEVY CHANGE TO ENHANCE CURRENT SERVICE LEVELS - 2.44%
Strategic Initiatives: Based on Council feedback, staff has summarized the areas where additional funding is needed to increase our current level of service.
Economic Development Authority - $222,000
($161,000 EDA tax levy plus $61,000 general
fund transfer to EDA)
The Economic Development Authority (EDA) has identified a need for additional expenditure budget and funding for
economic development initiatives, including loans and subsidies to assist with commercial development and
expansion. The assistance provided by the City Council and EDA in recent years to support business development,
retention and expansion has helped the city achieve its stated public purpose objectives. The city has added nearly
330,000 square feet of new commercial/industrial property to the city over the past few years in part due to the
support of the Prior Lake City Council and Economic Development Authority. This new commercial and industrial
square footage results in an estimated $120,000+ in annual property tax payments to the City of Prior Lake. That
equates to almost 1% of our tax levy annually that is paid by this new commercial tax base. The city is striving to
increase this commercial tax base and the additional funding request would be used to this end.
Trail and Sidewalk Replacement - $90,000 As noted above, our trail replacement is not adequately funded under the current plan. The proposed tax levy
includes one-time funding of $90k to work toward meeting trail and sidewalk maintenance and repair needs. This
funding is not for the development of new trails.
Street Fees - TBD
A court challenge of the statutory basis for infrastructure development fees has eliminated the city’s ability to charge
a street infrastructure/impact fee. The city has relied on these street impact fees to provide funding for street
infrastructure needed for new development. Without this revenue, the city is facing a significant infrastructure
financing shortfall; the gap may be as high as $30 million to build a complete transportation system. The city is
evaluating options to finance these infrastructure costs. One option is to begin funding a portion of the future
anticipated cost through the tax levy, similar to how other long-term capital plans, such as equipment replacement,
are funded. Staff has not included any funding for this in the tax levy as proposed, however, the Council has set the
preliminary levy at an amount that would allow us the flexibility to consider such funding as we continue the 2020
budget process.
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Technology Expenditures: As part of the initial preliminary budget, staff included the redesign of city’s website redesign in the 2020 tax levy budget request at $40,000.
Council directed staff to fund this expenditure from the General Fund reserves to reduce the 2020 tax levy impact.
Website Redesign - $40,000 expenditure
(40,000) use of reserve
$ 0 tax levy impact
The city’s website platform has been in place 12 years ago and is in desperate need of an update. The city’s web
content is outdated and difficult to edit due to hypertext code, which requires City staff to coordinate with an offsite
website designer to make changes. Most cities today are using a content management system (CMS) for a variety of
reasons with cyber security and external hosting being the primary factors. The user -friendly interface of a CMS will
allow staff in each department to edit their page content, rather than with one person. This means the City’s web
information will be timelier and more relevant for users. Finally, the current City website is not Americans with
Disability Act (ADA) compliant, which require that local governments provide qualified individuals with disabilities
equal access to their programs, services, or activities, including access to information on the City’s website. The
updated website will meet ADA requirements.
9/16/2019 - Attachment 3
2018 2019 2019 2020 2020 2020
ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSED
DEPT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
Fund 101 - GENERAL FUND
41110.00 MAYOR & COUNCIL 63,173 71,866 71,866 75,507 3,641 5.07
41130.00 ORDINANCE 7,091 7,500 7,500 7,500
41320.00 ADMINISTRATION 442,163 436,935 436,935 333,236 (103,699) (23.73)
41330.00 BOARDS & COMMISSIONS 9,812 11,765 11,765 11,765
41400.00 CITY CLERK FUNCTIONS 60,550 60,550 116,403 55,853 92.24
41410.00 ELECTIONS 20,557 34,231 34,231
41520.00 FINANCE 446,866 480,310 485,705 515,694 29,989 6.17
41540.00 INTERNAL AUDITING 30,615 31,300 31,300 35,475 4,175 13.34
41550.00 ASSESSING 194,716 202,600 202,600 218,704 16,104 7.95
41610.00 LEGAL 162,462 200,000 200,000 200,000
41820.00 HUMAN RESOURCES 194,356 188,830 188,830 302,357 113,527 60.12
41830.00 COMMUNICATIONS 116,934 128,297 128,297 180,451 52,154 40.65
41910.00 COMMUNITY DEVELOPMENT 329,121 348,365 348,365 380,152 31,787 9.12
41920.00 INFORMATION TECHNOLOGY 344,209 394,650 413,540 438,630 25,090 6.07
41940.00 FACILITIES - CITY HALL 453,316 472,924 472,924 505,601 32,677 6.91
42100.00 POLICE 4,172,593 4,586,881 4,616,571 4,826,725 210,154 4.55
42200.00 FIRE 960,919 932,896 932,896 1,033,548 100,652 10.79
42400.00 BUILDING INSPECTION 577,534 599,949 599,949 604,809 4,860 0.81
42500.00 EMERGENCY MANAGEMENT 9,083 11,935 11,935 14,875 2,940 24.63
42700.00 ANIMAL CONTROL 26,400 26,448 26,448 28,800 2,352 8.89
43050.00 ENGINEERING 351,132 373,844 373,844 379,173 5,329 1.43
43100.00 STREET 1,130,274 1,226,903 1,226,903 1,338,504 111,601 9.10
43400.00 CENTRAL GARAGE 401,567 460,031 460,031 483,075 23,044 5.01
45100.00 RECREATION 435,614 416,675 397,475 474,241 76,766 19.31
45200.00 PARKS 1,366,192 1,481,141 1,511,201 1,623,564 112,363 7.44
45500.00 LIBRARIES 48,780 66,955 66,955 69,073 2,118 3.16
80000.00 Transfers to other Funds 819,651 334,769 334,769 403,018 68,249 20.39
TOTAL EXPENDITURES - FUND 101 13,115,130 13,554,319 13,619,154 14,635,111 1,015,957 7.46
BUDGET REPORT
City of Prior Lake
Expenditures
From Amended Budget
9/16/2019 - Attachment 3
2018 2019 2019 2020 2020 2020
ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSED
DEPT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
BUDGET REPORT
City of Prior Lake
Expenditures
From Amended Budget
DEBT SERVICE FUNDS
47000.00 DEBT SERVICE 4,897,616 5,345,327 5,345,327 5,322,317 (23,010) (0.43)
80000.00 Transfers to other Funds 58,024 135,000 135,000 110,000 (25,000) (18.52)
TOTAL EXPENDITURES - DEBT SERVICE FUNDS 4,955,640 5,480,327 5,480,327 5,432,317 (48,010) (0.88)
Fund 210 - CABLE FRANCHISE FUND
41340.00 PUBLIC CABLE ACCESS 65,137 17,805 17,805 9,200 (8,605) (48.33)
TOTAL EXPENDITURES - FUND 210 65,137 17,805 17,805 9,200 (8,605) (48.33)
Fund 225 - CAPITAL PARK FUND
45040.00 PIKE LAKE PARK 7,545
45147.00 MARKLEY LAKE TRAIL 370
45200.00 PARKS 57,003 470,000 470,000 (470,000) (100.00)
TOTAL EXPENDITURES - FUND 225 64,918 470,000 470,000 - (470,000) (100.00)
Fund 240 - EDA SPECIAL REVENUE FUND
46500.00 ECONOMIC DEVELOPMENT 145,491 145,467 145,467 484,535 339,068 233.09
46503.00 TECH VILLAGE INCUBATOR 4,362 4,350 4,350 5,100 750 17.24
TOTAL EXPENDITURES - FUND 240 149,853 149,817 149,817 489,635 339,818 226.82
Fund 410 - REVOLVING EQUIPMENT FUND
42100.00 POLICE 133,212 207,824 254,174 443,000 188,826 74.29
42200.00 FIRE 300,897 248,960 613,780 115,000 (498,780) (81.26)
42400.00 BUILDING INSPECTION 59,410 59,410 32,000 (27,410) (46.14)
43100.00 STREET 422,882 422,882 257,000 (165,882) (39.23)
43400.00 CENTRAL GARAGE 21,118 20,000 20,000 20,000
45200.00 PARKS 235,768 123,741 123,741 333,000 209,259 169.11
49400.00 WATER 10,464 66,519 66,519 (66,519) (100.00)
49420.00 WATER QUALITY 191,303
TOTAL EXPENDITURES - FUND 410 892,762 1,149,336 1,560,506 1,200,000 (360,506) (23.10)
Fund 430 - REVOLVING PARK EQUIP FUND
45200.00 PARKS 54,134 289,292 355,292 346,000 (9,292) (2.62)
TOTAL EXPENDITURES - FUND 430 54,134 289,292 355,292 346,000 (9,292) (2.62)
9/16/2019 - Attachment 3
2018 2019 2019 2020 2020 2020
ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSED
DEPT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
BUDGET REPORT
City of Prior Lake
Expenditures
From Amended Budget
Fund 440 - FACILITIES MANAGEMENT FUND
41940.00 FACILITIES - CITY HALL 10,048
42200.00 FIRE 743,364 67,998 67,998 20,000 (47,998) (70.59)
45500.00 LIBRARIES 21,965 81,965 84,000 2,035 2.48
49400.00 WATER 23,096 10,000 10,000
TOTAL EXPENDITURES - FUND 440 776,508 89,963 149,963 114,000 (35,963) (23.98)
Fund 450 - PERMANENT IMPROVEMENT REVOLVING FUND
43100.00 STREET 629,962 700,000 700,000 700,000
80000.00 Transfers to other Funds 75,374 186,933 186,933 279,933 93,000 49.75
TOTAL EXPENDITURES - FUND 450 705,336 886,933 886,933 979,933 93,000 10.49
Fund 601 - WATER FUND
41520.00 FINANCE 98,022 94,075 94,075 100,696 6,621 7.04
49400.00 WATER 2,605,076 4,267,461 4,767,181 2,378,324 (2,388,857) (50.11)
80000.00 Transfers to other Funds 1,622,445 895,495 895,495 923,160 27,665 3.09
TOTAL EXPENDITURES - FUND 601 4,325,543 5,257,031 5,756,751 3,402,180 (2,354,571) (40.90)
Fund 602 - STORM WATER UTILITY
49420.00 WATER QUALITY 600,028 917,642 917,642 734,081 (183,561) (20.00)
80000.00 Transfers to other Funds 480,667 83,860 83,860 85,780 1,920 2.29
TOTAL EXPENDITURES - FUND 602 1,080,695 1,001,502 1,001,502 819,861 (181,641) (18.14)
Fund 604 - SEWER FUND
41520.00 FINANCE 97,404 91,341 91,341 100,396 9,055 9.91
49450.00 SEWER 2,819,034 3,229,922 3,729,642 3,166,135 (563,507) (15.11)
80000.00 Transfers to other Funds 1,117,033 277,147 277,147 294,110 16,963 6.12
TOTAL EXPENDITURES - FUND 604 4,033,471 3,598,410 4,098,130 3,560,641 (537,489) (13.12)
TOTAL EXPENDITURES - ALL FUNDS 30,219,127 31,944,735 33,546,180 30,988,878 (2,557,302) (7.62)
2020 2020
PROPOSED PROPOSED
AMT CHANGE % CHANGE
(955,857) (2.99)
From Original Budget