HomeMy WebLinkAbout7A 2020 2020 Final Budget and Tax Levy Report
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: DECEMBER 2, 2019
AGENDA # 7A
PREPARED BY: JASON WEDEL, CITY MANAGER
CATHY ERICKSON, FINANCE DIRECTOR
JASON ETTER, ACCOUNTING MANAGER
PRESENTED BY: CATHY ERICKSON
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION ADOPTING 2020 PRIOR
LAKE BUDGETS AND CERTIFYING FINAL 2020 CITY OF PRIOR LAKE
PROPERTY TAX LEVIES 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.
4. Attract, retain and train a high caliber workforce to ensure high-quality
services
5. Grow collaborations to provide efficient and cost-effective services to the
community.
6. Seek community engagement through a variety of communication
methods to reach all residents.
Transportation & Mobility
7. Maintain quality local street system based on a financially stable plan that
meets Overall Condition targets.
DISCUSSION: Introduction
The purpose of this agenda item is to consider approval of the 2020 budgets
for the city of prior and to determine the City’s final 2020 property tax levy for
certification to the Scott County Department of Taxation office.
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
On September 16, 2019, the City Council considered the preliminary budgets
and adopted a preliminary tax levy of $13,671,137 which represented an
increase of $893,102 (6.99%) over 2019. At that time, the Council announced
that a public budget meeting would be held on December 2nd, at which time
Page 2
the 2020 budget and levy would be discussed, and public comments
considered.
On November 4, the Council held an additional budget workshop. Staff
provided a recap of the budget and levy change as proposed on September
16. Staff also asked the Council if there was additional information needed,
or any changes to be made to the 2020 budgets prior to the December 2nd
public hearing. After significant discussion, the Council decided to hold off
on any proposed changes until after public comments are received at the
public hearing on December 2nd.
Current Circumstances
Budget Overview
A budget overview of the proposed budgets in the amount of $30,897,536 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. Summaries for revenues and
expenditures are also included with this report as Attachment 3. The
summaries reflect two years of actuals, current year original and amended
budgets, and the proposed 2020 budget.
2020 Proposed Tax Levy:
The tax levy proposed for adoption on December 2 is $13,671,137 which is
an increase of $893,102 (6.99%) over 2019.
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.
Page 3
2020 Proposed Tax Levy Changes
Use of General Fund Reserves:
The Council supported use of General Fund reserves of $201,250 to fund an
EDA funding transfer (161k) and redesign of the city’s website (40k).
Enterprise Funds:
The budget summaries of the three enterprise funds that the City operates
are included on Attachment 3. At the City Council meeting on August 5, staff
presented the Capital Improvement Program (CIP) which included rate
increases necessary to fund operations as well as capital projects identified
in the CIP. 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. Council has indicated
their support for pay as you go funding in the utility funds. Based on Council
feedback, 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. Further detail regarding the proposed rate
changes is summarized on the Official Fee Ordinance Public Hearing and
Code Amendment Agenda Report which will also be presented on December
2 as a separate public hearing (agenda item 7B).
An annual rate increase is reflected in the water, sewer and storm water
budgets as shown below.
Page 4
Fee Description 2019 Amount Proposed 2020
Amount
Utility Billing:
Water Rate – First
25,000 gallons
$4.81/1,000
gallons
$5.05/1,000
gallons
Water Rate – Over
25,000 gallons
$6.63/1,000
gallons
$6.96/1,000
gallons
Storm Water
Charge
$15.06 (residential)
$45.18/acre
$16.57 (residential)
$49.71/acre
Met Council Sewer
Rate (MCES)
$2.81/1,000
gallons
$3.01/1,000
gallons
Sewer Rate – City $3.39/1,000
gallons
$3.89/1,000
gallons
FINANCIAL
IMPACT:
The total proposed tax levy change is a 6.99% increase from the prior
year, as detailed in the chart above. For 64% of the homes in Prior Lake,
this will result in a tax increase of about 1.4% 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 proposed 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 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.
Adopted
Budget 2019
Proposed Budget
2020
TAX LEVIES
General Fund 8,146,555 8,731,099
Debt Service Fund 3,497,188 3,561,288
Equip Revolving Fund 600,000 625,000
Revolving Park Equip Fund 289,292 319,000
EDA Fund 150,000 274,750
PIR (Street Overlay) Fund 95,000 130,000
Facilities Mgmt Fund - 30,000
Total Tax Levies 12,778,035 13,671,137
SUMMARY OF CHANGE IN TAX LEVIES
General Fund 367,373 584,544
Debt Service Fund 127,017 64,100
Equip Revolving Fund 50,000 25,000
Revolving Park Equip Fund 51,108 29,708
EDA Fund 10,000 124,750
PIR (Street Overlay) Fund 95,000 35,000
Facilities Mgmt Fund - 30,000
TOTAL $ CHANGE IN TAX LEVIES 700,498 893,102
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%10.27%
EDA Fund 7.1%83.17%
PIR Fund 36.84%
Facilities Mgmt Fund
TOTAL % CHANGE IN TAX LEVIES 5.80%6.99%
TAX CAPACITY TAX RATE 33.020%32.520%
Annual % Change -0.06%-1.51%
MARKET VALUE TAX RATE 0.006768%0.006480%
Annual % Change -2.24%-4.25%
Page 5
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 for 2020 is as follows:
Growth (New Construction) 2.5%
CPI-U (MSP) 2.4%
Debt Service 1.0%
Base Property Tax Levy Consideration 5.9%
The following chart illustrates the total property tax levy on a per household
basis.
As reflected in the chart, the proposed 2020 total tax levy/household is higher
than the level which reflects the combined annual cost of inflation and growth.
Our request of 6.99% for the property tax levy change above the 5.9% base
property tax consideration is primarily for additional funding for the EDA and
areas where costs are coming in higher than the inflation benchmark.
EDA additional funding request: As mentioned in previous work sessions,
funding for the EDA is an investment in the city’s downtown and future. 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.
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
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 6
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.
Costs higher than CPI: The benchmark consumer price index of 2.4% (Mpls
St Paul CPI -U) is used as a measure of inflation. It is trending lower than the
actual costs increases we are seeing in many items including the following
areas:
• Labor Contracts – 3%
• Health insurance premium increase – 13.5%
• Statutory PERA contribution increases for Police and Fire - 4% (two yr.
increase of 9%)
• Salt/Ice Management Materials – 9% increase from 2019 to 2020 (two
yr. increase of 27%) This is a $70,000 increase in the budget from
2018.
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 proposed 2020 budget:
As reflected in the chart above, the proposed 2020 operating expenditures per
household continues to be less than the level which reflects the cost of inflation
and growth.
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 homeowners would see a 1.2% increase in
the city portion of their taxes. Owners of $600,000 and $900,000 valued
homes would see 1.4% and 1.2% increase respectively.
Page 7
ISSUES:
Strategic Initiatives-EDA:
The EDA has requested additional funding of $322,500 to help achieve
economic development initiatives including loans and incentives to assist with
commercial development and expansion. The proposed increase in the EDA
funding in the budget is at $286,000 which does not meet the EDA funding
request. The funding is comprised of the following:
• $161,250-Transfer from the General Fund (planned use of reserves/no
tax levy impact)
• $124,750-Increase in EDA tax levy (reduced by $36,250 from original
request to meet the levy target of 6.99%)
General Fund 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). The 2019 and 2020 reserve estimates are shown below.
• 2019 Year End Estimate: 47- 48%
• 2020 Year End Projection: 44- 45%
Staff will update the reserve estimates when we close the 2020 year for
financial purposes. The impact of the 2020 planned use of reserves is a 1.3%
reduction of the 2020 reserve projection. Staff recommends annual monitoring
of fund balance and reserve replenishment, if needed, otherwise, the fund
balance could drop below the level stated in the comprehensive financial
management plan over time.
Areas for Proposed Tax Levy Reduction:
Subsequent to the November 4 budget work session, the City Manager and
Staff have identified the following areas for potential budget/tax levy reduction.
Staff is looking for Council direction at the meeting regarding the items shown
in the table below.
• Does Council want to reduce the overall tax levy from 6.99% to 6.44%
for these items?
• Does Council want to keep the tax levy at 6.99% as proposed and
transfer the tax levy out of the General Fund and PIR Fund and into
the Equipment Revolving Fund? There has been significant Council
discussion regarding funding equipment replacement on a paygo basis
instead of debt issuance. This would add $70,000 to our annual
RESIDENTIAL IMPACTS
% Net Net Net Net Net Net
of Inc/Dec Difference Inc/Dec Difference Inc/Dec Difference
Inc/Dec Total 19 vs 20 % Change 19 vs 20 % Change 19 vs 20 % Change
+15.01+%498 5%171.08$ 15.1%338.70$ 16.4%504.93$ 15.3%
+10.01-15.00%545 6%139.53$ 12.3%276.75$ 13.4%412.01$ 12.5%
+5.01-10.00%2,215 24%76.44$ 6.7%152.86$ 7.4%226.16$ 6.8%
+0.01-5.00%4,937 54%13.35$ 1.2%28.97$ 1.4%40.32$ 1.2%
No Change 13 0%(18.20)$ -1.6%(32.98)$ -1.6%(52.60)$ -1.6%
-0.01-5.00%685 8%(49.75)$ -4.4%(94.93)$ -4.6%(145.52)$ -4.4%
-5.01 - 10.00%160 2%(112.84)$ -9.9%(218.82)$ -10.6%(331.36)$ -10.0%
-10.00 - 15.00%9 0%(175.93)$ -15.5%(342.72)$ -16.6%(517.20)$ -15.7%
-15.01% +7 0%(207.48)$ -18.3%(404.66)$ -19.6%(610.12)$ -18.5%
9,069 100%
AVG MV- $349,600 $600,000 HOME $900,000 HOME
% EMV Value Range
# of
affected
Properties
Page 8
equipment replacement tax levy to help minimize future debt issuance
for equipment.
ALTERNATIVES: 1. Conduct the public hearing and approve a resolution adopting final
budgets and setting maximum levies as set forth in the resolution.
2. Conduct a public hearing and approve the resolution modified to adjust
certain expenditures and the programs they support.
3. Conduct the public hearing and defer adoption of the above resolution for
a special city council meeting.
RECOMMENDED
MOTION:
ATTACHMENTS:
Alternative #1
1) December 2, 2019 Council Resolution – 2020 Final 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
Fund Account Amount % of Tax Levy Explanation
General Fund Legal 20,000 0.16%
Legal fees vary by year based on issues that arise. The legal fees estimate for 2017-2019 is
$180,000. Staff would support reducing the 2020 budget to the three yr. average. Any
legal fees above the budgeted amount would be funded from reserves.
PIR Fund (Street Overlay)Tax Levy 50,000 0.39%
The Street Overlay Plan is funded from a combination of tax levy, bond proceeds, and
special assessments. Prepayment of special assessments will vary by year depending on
owner preference to prepay or certify to their taxes. Staff modeled 25% for special
assessment prepayments and the city has received 50% in prepayments for the 2019
overlay project. Based on this, some of the 2020/future overlay costs can be funded from
PIR Fund reserves instead of tax levy.
Total 70,000 0.55%
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 19-143
A RESOLUTION ADOPTING 2020 CITY BUDGETS AND CERTIFYING
FINAL 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 property tax levy to the
Scott County Department of Taxation; and
WHEREAS, The City Council hereby adopts the following budgets for the City of Prior Lake for
calendar year 2020; and
General Fund $ 14,676,748
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 453,135
Water Fund 3,401,315
Sewer Fund 3,465,196
Water Quality Fund 819,692
Total $ 30,897,536
WHEREAS,
The property tax levy for the City of Prior Lake for payable year 2020 is as follows; and
General Purposes $ 8,731,099
Revolving Equipment Fund 625,000
Revolving Park Equipment Fund 319,000
Permanent Improvement Revolving Fund 130,000
Facilities Management Fund 30,000
EDA 274,750
Debt Service 3,561,288
Total $ 13,671,137
WHEREAS,
The property tax levy by tax base for the City of Prior Lake for payable year 2020 is as
follows; and
Tax Capacity Based Levy $ 13,429,080
Market Value Based Referenda Levy 242,057
Total $ 13,671,137
WHEREAS,
WHEREAS,
The City of Prior Lake property tax levy for the year payable 2020 represents a
$893,102 or 6.99% increase in total tax levy (including the Economic Development
Authority levy); and
The City Council held a public hearing and considered 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 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 cove r debt requirements.
Purpose Amount Amount
* General City Purposes 8,731,099
* Revolving Equipment Fund 625,000
* Revolving Park Equipment Fund (Park Equipment & Trail Replacement) 319,000
* Permanent Improvement Revolving Fund (Street Overlay) 130,000
* Facilities Management Fund 30,000
* EDA 274,750
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 $ 13,671,137
VOTE Briggs Thompson Burkart Braid Erickson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Jason Wedel, City Manager
City of Prior Lake 2020 Public Hearing 12/2/2019
2020 Budget Attachment 1
Budgeted Funds
x
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 8,731,099$ 3,319,231$ -$ -$ 625,000$ 319,000$ 130,000$ 30,000$ 274,750$ 13,429,080$ -$ -$ -$ -$ 13,429,080$
Levy - Market Value 242,057 - - - - - - 242,057 - - - - 242,057
MVHC Aid - - - - - - - - - - - - -
Special Assessments - 488,995 - - - 305,390 - - 794,385 - - - - 794,385
Licenses & Permits 830,464 - - - - - - 830,464 - - - - 830,464
Fines & Forfeits - - - - - - - - - - - - -
Intergovernmental 2,126,362 - - - - - - 2,126,362 - - - - 2,126,362
Charges for Services 1,808,050 - 32,000 531,200 - - 9,575 2,380,825 4,469,743 4,293,330 1,166,677 9,929,750 12,310,575
Other Revenues 267,466 57,400 - 26,800 19,000 9,000 6,477 9,000 7,560 402,703 42,000 41,000 11,600 94,600 497,303
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 14,475,498$ 5,080,272$ 32,000$ 558,000$ 939,000$ 328,000$ 931,867$ 138,000$ 453,135$ 22,935,772$ 4,511,743$ 4,334,330$ 1,178,277$ 10,024,350$ 32,960,122$
Expenditures / Uses
Employee Services 10,077,789$ -$ -$ -$ -$ -$ -$ 132,793$ 10,210,582$ 817,646$ 808,866$ 358,912$ 1,985,424$ 12,196,006$
Current Expenditures 4,127,622 - 1,200 - - - 700,000 - 319,342 5,148,164 1,315,955 1,962,062 300,000 3,578,017 8,726,181
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 14,273,730$ -$ 9,200$ -$ 1,200,000$ 346,000$ 700,000$ 114,000$ 453,135$ 17,096,065$ 2,303,705$ 2,996,636$ 733,912$ 6,034,253$ 23,130,318$
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 14,676,748$ 5,432,317$ 9,200$ -$ 1,200,000$ 346,000$ 979,933$ 114,000$ 453,135$ 23,211,333$ 3,401,315$ 3,465,196$ 819,692$ 7,686,203$ 30,897,536$
Change in Fund Balance (201,250)$ (352,045)$ 22,800$ 558,000$ (261,000)$ (18,000)$ (48,066)$ 24,000$ -$ (275,561)$ 1,110,428$ 869,134$ 358,585$ 2,338,147$ 2,062,586$
2019 Property Tax Levy Comparison 2020 Public Hearing 12/2/2019
Attachment 1
Change 19 - 20
Property Taxes 2019 2020 Amount Percent
Levy - Tax Capacity
General Fund - Operating 8,146,555$ 8,731,099$ 584,544$ 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 289,292 319,000 29,708 10.27%
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 150,000 274,750 124,750 83.17%
12,543,617 13,429,080 885,463 7.06%
Levy - Market Value - General Fund 234,418 242,057 7,639 3.26%
Total Levy 12,778,035$ 13,671,137$ 893,102$ 6.99%
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 14,676,748$ 5,432,317$ 9,200$ -$ 1,200,000$ 346,000$ 979,933$ 114,000$ 453,135$ 23,211,333$ 3,401,315$ 3,465,196$ 819,692$ 7,686,203$ 30,897,536$
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 ($)1,122,429$ (48,010)$ (8,605)$ (470,000)$ 50,664$ 56,708$ 93,000$ 24,037$ 303,318$ 1,123,541$ (1,855,716)$ (133,214)$ (181,810)$ (2,170,740)$ (1,047,199)$
Change 2018 to 2019 (%)8.28%-0.88%-48.33%n/a 4.41%19.60%n/a 26.72%202.46%5.09%-35.30%-3.70%-18.15%-22.02%-3.28%
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 14,676,748$ 5,432,317$ 9,200$ -$ 1,200,000$ 346,000$ 979,933$ 114,000$ 453,135$ 23,211,333$ 3,401,315$ 3,465,196$ 819,692$ 7,686,203$ 30,897,536$
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 ($)1,057,594$ (48,010)$ (8,605)$ (470,000)$ (360,506)$ (9,292)$ 93,000$ (35,963)$ 303,318$ 521,536$ (2,355,436)$ (632,934)$ (181,810)$ (3,170,180)$ (2,648,644)$
Change 2018 to 2019 (%)7.77%-0.88%-48.33%-100.00%-23.10%-2.62%10.49%-23.98%202.46%2.30%-40.92%-15.44%-18.15%-29.20%-7.90%
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2020 Proposed Tax Levy Components
Attachment 2
LEVY CHANGE TO MAINTAIN CURRENT SERVICE LEVELS – 6.02%
Mandatory Items – 5.08 %
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 activit ies.
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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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.
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 - .97%
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 - $124,750
$124,750 EDA tax levy
61,000 General Fund transfer to EDA
(61,000) use of reserve
$ 0 tax levy impact
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.
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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 budg et request at $40,000.
Council directed staff to fund this expenditure from the General Fund reserves to reduce the 2020 tax levy i mpact.
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.
General Fund Reserve
General fund use of reserves- levy impact
$81,000 comprised of the following items:
$ 282,000 2019 use of reserves
(161,000) 2020 use of reserve to fund EDA
(40,000) 2020 use of reserve to fund website
$ 81,000 Use of reserves – levy impact
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 be ach) which will
add $31.2k in revenue.
12/2/2019 - Attachment 3
2018 2019 2019 2020 2020 2020
BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSED
CLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
Fund 101 - GENERAL FUND
Taxes 7,988,126 8,380,973 8,380,973 8,973,156 592,283 7.07
Charges for Services 1,952,137 1,716,170 1,716,170 1,808,050 86,580 5.04
Intergovernmental 1,835,750 1,861,819 1,861,819 2,126,362 243,997 13.11
Miscellaneous Revenues 420,889 280,139 280,139 267,466 (32,439) (11.58)
Sale of assets 3,323
Transfers in 443,000 456,300 456,300 470,000 13,700 3.00
Licenses and Permits 994,613 642,118 642,118 830,464 192,321 29.95
Fines and Forfeitures 1,448
TOTAL REVENUES - FUND 101 13,639,286 13,337,519 13,337,519 14,475,498 1,137,979 8.53
DEBT SERVICE FUNDS
Transfers in 1,171,697 1,131,409 1,131,409 1,214,646 83,237 7.36
Taxes 3,139,951 3,262,770 3,262,770 3,319,231 56,461 1.73
Miscellaneous Revenues 1,041,247 680,604 680,604 546,395 (134,209) (19.72)
TOTAL REVENUES - DEBT SERVICE FUNDS 5,352,895 5,074,783 5,074,783 5,080,272 5,489 0.11
BUDGET REPORT
City of Prior Lake
Revenues
From Amended Budget
12/2/2019 - Attachment 3
2018 2019 2019 2020 2020 2020
BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSED
CLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
BUDGET REPORT
City of Prior Lake
Revenues
From Amended Budget
Fund 210 - CABLE FRANCHISE FUND
Charges for Services 36,081 37,133 37,133 32,000 (5,133) (13.82)
Miscellaneous Revenues 820
TOTAL REVENUES - FUND 210 36,901 37,133 37,133 32,000 (5,133) (13.82)
Fund 225 - CAPITAL PARK FUND
Charges for Services 506,726 474,000 474,000 531,200 57,200 12.07
Miscellaneous Revenues 26,319 24,000 24,000 26,800 2,800 11.67
TOTAL REVENUES - FUND 225 533,045 498,000 498,000 558,000 60,000 12.05
Fund 240 - EDA SPECIAL REVENUE FUND
Taxes 139,511 150,000 150,000 274,750 124,750 83.17
Charges for Services 8,018 7,820 7,820 9,575 1,755 22.44
Miscellaneous Revenues 6,381 3,300 3,300 7,560 4,200 127.27
Transfers in 300,000 161,250 161,250
TOTAL REVENUES - FUND 240 453,910 161,120 161,120 453,135 292,015 181.24
12/2/2019 - Attachment 3
2018 2019 2019 2020 2020 2020
BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSED
CLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
BUDGET REPORT
City of Prior Lake
Revenues
From Amended Budget
Fund 410 - REVOLVING EQUIPMENT FUND
Taxes 549,823 600,000 600,000 625,000 25,000 4.17
Intergovernmental
Miscellaneous Revenues 20,935 19,775 19,775 19,000 (775) (3.92)
Sale of assets 19,435
Transfers in 155,000 217,600 217,600 180,000 (37,600) (17.28)
Debt Issued 248,960 248,960 115,000 (133,960) (53.81)
UNK_REV 10,000
TOTAL REVENUES - FUND 410 755,193 1,086,335 1,086,335 939,000 (147,335) (13.56)
Fund 430 - REVOLVING PARK EQUIP FUND
Taxes 238,477 289,292 289,292 319,000 29,708 10.27
Miscellaneous Revenues 17,541 7,310 7,310 9,000 1,690 23.12
TOTAL REVENUES - FUND 430 256,018 296,602 296,602 328,000 31,398 10.59
Fund 440 - FACILITIES MANAGEMENT FUND
Taxes 30,000 30,000
Miscellaneous Revenues 6,045 4,763 4,763 9,000 4,237 88.96
Transfers in 58,350 94,927 94,927 99,000 4,073 4.29
Debt Issued
TOTAL REVENUES - FUND 440 64,395 99,690 99,690 138,000 38,310 38.43
Fund 450 - PERMANENT IMPROVEMENT REVOLVING FUND
Taxes 95,000 95,000 130,000 35,000 36.84
Miscellaneous Revenues 275,962 234,320 234,320 311,867 77,547 33.09
Transfers in 148,000
Debt Issued 490,000 490,000 490,000 490,000
TOTAL REVENUES - FUND 450 913,962 819,320 819,320 931,867 112,547 13.74
12/2/2019 - Attachment 3
2018 2019 2019 2020 2020 2020
BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSED
CLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGE
BUDGET REPORT
City of Prior Lake
Revenues
From Amended Budget
Fund 601 - WATER FUND
Charges for Services 7,166,654 4,173,152 4,173,152 4,469,743 296,590 7.11
Intergovernmental 500
Miscellaneous Revenues 128,388 37,250 37,250 42,000 4,750 12.75
Sale of assets 1,185
Transfers in 2,608,474 1,900,000 1,900,000 (1,900,000) (100.00)
TOTAL REVENUES - FUND 601 9,905,201 6,110,402 6,110,402 4,511,743 (1,598,659) (26.16)
Fund 602 - STORM WATER UTILITY
Charges for Services 1,414,361 978,674 978,674 1,166,677 188,003 19.21
Intergovernmental 135,002
Miscellaneous Revenues 8,789 11,690 11,690 11,600 (90) (0.77)
Transfers in 143,612
Storm Water Charges 900
TOTAL REVENUES - FUND 602 1,702,664 990,364 990,364 1,178,277 187,913 18.97
Fund 604 - SEWER FUND
Charges for Services 4,333,854 3,821,958 3,821,958 4,313,330 491,372 12.86
Miscellaneous Revenues 27,341 18,800 18,800 21,000 2,200 11.70
Sale of assets 1,185
Transfers in 17,434
TOTAL REVENUES - FUND 604 4,379,814 3,840,758 3,840,758 4,334,330 493,572 12.85
TOTAL REVENUES - ALL FUNDS 37,993,284 32,352,026 32,352,026 32,960,122 608,096 1.88
2020 2020
PROPOSED PROPOSED
AMT CHANGE % CHANGE
608,096 1.88
From Original Budget