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HomeMy WebLinkAbout01(A) - 2021 Budget/Tax Levy Discussion Report Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL WORK SESSION REPORT 2021 BUDGET/TAX LEVY DISCUSSION The purpose of this workshop is to discuss the proposed 2021 budget with the Council which will be the subject of the December 7 truth in taxation hearing. Staff is looking for Council direction regarding any proposed budget changes and proposed tax levy change prior to the December 7 public hearing. The following budget development meetings have been held. The impact of these updated plans and budget on the debt balance, tax levy, fund balance reserves and utility rates were a part of the Council and staff discussion at these meetings. June/July CIP work sessions July 20 Financial planning work session September 8 Budget work session August 10 & Sept. 8 EDA meeting budget discussions September 21 Preliminary 2021 budgets and certification of preliminary 2021 city tax levy On September 21, staff presented Council with a proposed preliminary tax levy increase of 5.67%. Council directed staff to reduce the preliminary levy increase to 5.25% and adjust the preliminary budget accordingly. The levy increase of 5.25% includes the City portion of 4.7% and EDA portion of .55%. This action set the maximum tax levy for 2021 at $14,315,207. After the preliminary tax levy hearing, several budget changes were necessary. The budget changes were made within the constraints set by the council direction of a 5.25% max levy increase. Reduction in Parks department seasonal staff: Budget Impact -$24,000 The Parks seasonal budget was reduced to adjust the overall city budget to meet the preliminary maximum tax levy approved by the council on 9/21. Staff removed $24,000 from the Parks department seasonal staff budget. This represents about 3.5 summer seasonal positions for the months of June-August. This will impact services normally performed by the Parks seasonal staff and includes no flowers in the downtown area, no annual wood mulch where needed, no public restrooms, and scaled back city mowing services. We will maintain the port-a-biff program/placement utilized this year. Council approved building inspector add in 2021 - Budget Impact - $0: Staff recommended applying for a grant for partial funding of a building inspector position. Council approved the MN Department of Labor grant application for partial funding at the July 20 council meeting (RES20-077). The grant is $65k for two years (2021 and 2022). The 2021 budget reflected a headcount reduction of .75. However, the new building inspector position will be a headcount add of one. Therefore, the net change in the city headcount is an increase of .25 FTEs. The funding for the position is 2/3 from grant revenue and 1/3 from salary savings due to recent new hires at entry level step on the pay scale. 2 2021 election costs: Budget Impact +$7k A special election for Minnesota's 2nd Congressional District was scheduled for February 9, 2021 due to the death of candidate Adam Weeks. The status of the special election is the subject of an ongoing court challenge. The budget for the special election costs is included in the 2021 budget as the outcome of the court challenge is unknown at this time. Website budget presentation tool: Budget Impact +$11,500 With the upgrade of the new city website near completion, staff has included funding for a budget presentation software. The goal is to centralize the budget data, provide meaningful updates during the budgeting process, modernize and automate the process of creating the annual budget book, and create an ADA-accessible and GFOA compliant document that council members and residents can read and easily understand. Increase in Township Fire & Rescue Aid Revenue: Budget Impact - $64,500: City staff has reviewed the existing agreement for fire and rescue aid for Credit River and Spring Lake townships. We have proposed changes to the contract that include financing annual equipment replacement and facility repairs on a pay-go basis, financing major replacements and repairs with debt that follows the city’s debt repayment schedule of ten years, and funding for the city’s administrative costs of the Fire department. This will add $64,500 in revenue for fire and rescue aid to the townships which reduces the tax levy impact. Current Circumstances The preliminary 2021 budget is $35,163,849 and the preliminary 2021 tax levy is $14,315,207 which is a 5.25% increase from the previous year. 2021 Building Inspector Budget Impact: New Building Inspector Incremental Cost/(Savings) Building Inspector cost not covered by grant revenue 31,000 Salary savings due to new staff hired at entry level step on the pay scale (31,000) 2021 budget impact - 2021 FTE Impact 2020 budget FTEs 98.00 2021 FTE reduction in PW/Admin Departments (0.75) 2021 FTE add in Building Department (2/3 of cost funded with grant revenue and 1/3 of cost funded with new staff hired at entry level step)1.00 2021 budget FTEs 98.25 3 Estimated Tax Levy: The following chart summarizes the 2021 proposed tax levy changes. See attachment 2 for specific details of the components of the proposed 2021 tax levy change. 4 The chart below shows that proposed change in the city tax rates (tax capacity and market value). Both tax rates show a planned reduction in 2021 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. Based on the proposed tax levy, the city tax rate would be reduced from 32.496% in 2020 to 31.075% in 2021. This is a 4.4% reduction in the city tax rate (tax capacity) and a 3.8% reduction in the market value tax rate. The tax rate is applied against a home’s market value to arrive at the tax paid by a resident. Adopted Budget 2020 Proposed Budget 2021 TAX LEVIES General Fund 8,711,099 9,180,384 Debt Service Fund 3,561,288 3,560,073 Equip Revolving Fund 625,000 650,000 Revolving Park Equip Fund 319,000 375,000 EDA Fund 274,750 349,750 PIR (Street Overlay) Fund 80,000 120,000 Facilities Mgmt Fund 30,000 80,000 Total Tax Levies 13,601,137 14,315,207 SUMMARY OF CHANGE IN TAX LEVIES General Fund 367,373 469,285 Debt Service Fund 127,017 (1,215) Equip Revolving Fund 50,000 25,000 Revolving Park Equip Fund 51,108 56,000 EDA Fund 10,000 75,000 PIR (Street Overlay) Fund 95,000 40,000 Facilities Mgmt Fund - 50,000 TOTAL $ CHANGE IN TAX LEVIES 700,498 714,070 CURRENT YEAR TAX LEVIES ANNUAL % CHANGE General Fund 6.9%5.39% Debt Service Fund 1.8%-0.03% Equip Revolv Fund 4.2%4.00% Revolv Park Equip Fund 10.3%17.55% EDA Fund 83.2%27.30% PIR Fund -15.8%50.00% Facilities Mgmt Fund 166.67% TOTAL % CHANGE IN TAX LEVIES 6.44%5.25% TAX CAPACITY TAX RATE 32.496%31.075% Annual % Change -1.59%-4.37% MARKET VALUE TAX RATE 0.006503%0.006256% Annual % Change -3.91%-3.80% 5 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, $600,000 and $900,000 valued home. About 80% of the homeowner valuation change fell between .01-10.00%. 37% of city homeowners had a market value increase of .01-5.00%. For an average valued home, those homeowners would see a $21 annual decrease in the city portion of their taxes. Owners of $600,000 and $900,000 valued homes would see a $31 and $55 annual decrease respectively. 41% of city homeowners had a market value increase of 5.01-10.00%. For an average valued home, those homeowners would see a $42 annual increase in the city portion of their taxes (about $5/month). Owners of $600,000 and $900,000 valued homes would see a $87 and $122 annual increase respectively. Based on Council feedback, staff has identified areas where additional funding is needed to increase our current level of service. Economic Development Authority (EDA): • The EDA budget includes a funding increase of $75k to bring the EDA tax levy to $350k. Rational: In addition to staff funded from the EDA, in 2021, the EDA has a commitment of approximately $388,000 for the acquisition of the Sebastian Auto property as part of a downtown redevelopment project. The downtown redevelopment will be a mix of residential and commercial properties. With the tax levy set at $350,000, 2021 use of reserves of $160,000 will also be needed to help fund the 2021 EDA expenditures. The city has added nearly 390,000 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 $150,000 in annual property tax payments to the City of Prior Lake. That equates to over 1% of our tax levy annually that is paid by this new commercial tax base that has been recently added. The city is striving to increase this commercial tax base and the additional funding request would be used to this end and support the downtown redevelopment. RESIDENTIAL IMPACTS % Net Net Net Net Net Net of Inc/Dec Difference Inc/Dec Difference Inc/Dec Difference Inc/Dec Total 20 vs 21 % Change 20 vs 21 % Change 20 vs 21 % Change +15.01+%596 6%135$ 11.5%265$ 13.0%389$ 12.0% +10.01-15.00%967 10%106$ 9.0%206$ 10.1%300$ 9.2% +5.01-10.00%3,814 41%42$ 3.6%87$ 4.3%122$ 3.8% +0.01-5.00%3,412 37%(21)$ -1.8%(31)$ -1.5%(55)$ -1.7% No Change 3 0%(52)$ -4.4%(90)$ -4.4%(144)$ -4.4% -0.01-5.00%452 5%(84)$ -7.1%(149)$ -7.4%(233)$ -7.2% -5.01 - 10.00%36 0%(147)$ -12.5%(268)$ -13.2%(411)$ -12.6% -10.00 - 15.00%12 0%(210)$ -17.9%(386)$ -19.0%(588)$ -18.1% -15.01% +9 0%(242)$ -20.6%(445)$ -21.9%(677)$ -20.8% 9,301 100% % EMV Value Range # of affected Properties AVG MV $366,600 $600,000 $900,000 6 Use of 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 2020 and 2021 reserve estimates are shown below. • 2020 Year End Estimate: 50-52% (does not include CARES Act impact) • 2021 Year End Projection: 48-50% The impact of the CARES Act funding and eligible unbudgeted expenditures is not reflected in the 2020 projection information shown above. Staff will be treating the CARES Act funding separately, outside of the 2020 projection, until completion of the Federal single audit scheduled for Spring 2021. Staff will update the reserve estimates when we close the 2020 year for financial purposes. The 2021 budget includes a planned use of reserves of $115,000 to offset anticipated revenue shortfalls in building permit/plan check fees and SMSC aid for police services. Further information on the planned use of reserves is summarized below. • The city collects building permit and plan check revenue on new residential and townhome units built. The estimate for new construction for 2021 is 125 units which is less than the 2020 estimate of 135 units. This has a budgetary impact of $55k. The budget reflects a one-time use of funds of $35k to fund a portion of the revenue shortfall as compared to the 2020 budget as this is anticipated to be a “one-time” funding need. Initial building permit projections at the start of the pandemic were 115 for 2020. That number has been revised to 160 based on the YTD permit activity through September. Staff has been conservative in the 2021 building permit estimate as there is uncertainty in the new housing market due to the pandemic. It is anticipated that this will be a “one-time” revenue shortfall based on the housing demand we have experienced prior to the COVD19 pandemic. • City staff have been in discussions with the SMSC regarding the agreement for SMSC local government aid for Police services. The preliminary agreement indicates that we will receive $700,000 in 2021. However, this is $100k less than the 2021 budget amount of $800,000. The COVID19 pandemic has impacted Mystic Lake operations as it has impacted many businesses across the state. When Mystic Lake operations return to normal, we anticipate that the SMSC aid for Police services will include additional funding to move closer to our 2021 $850,000 funding recommendation. The budget reflects a one-time use of funds of $100k to cover this shortfall for 2021 police aid between budget and preliminary agreement received with the SMSC as this is anticipated to be a “one- time” funding need. 7 Enterprise Funds The budget summaries of the three enterprise funds (Water, Sewer and Stormwater) that the City operates are included on Attachment 1. At the City Council work session on August 3, 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 $3.8 million of water projects, $2.3 million of sewer projects, and $.7 million of water quality projects planned over the next five years. Based on Council direction, the timing of projects has been adjusted to manage the number of streets under reconstruction within the next year and moderate the impact on the tax levy and utility user rates. An annual rate increase is reflected in the water, sewer and storm water budgets and will be presented to the Council for approval as part of 2021 fee schedule adoption at the November 2 Council meeting. The City conducted a utility rate study in Fall 2019 to ensure revenue sufficiency and a rate calculation that is equitable and promotes water conservation. The Council directed staff to move forward with the utility rate structure change which includes adjusting the base rate to cover a greater portion of our fixed costs and move from a two tier to a four tier r ate structure to promote water conservation and charge a higher rate for users that generate the greatest demand on the city’s water and sewer infrastructure. City of Prior Lake 11/2 Council Workshop 2021 Budget Attachment 1 Budgeted Funds Capital Revolving Revolving Park Permanent Facilities Total Total General Debt Cable Park Equipment Equipment Improvement Management EDA Governmental Water Sewer Water Quality Enterprise Budgeted Fund Service Fund Fund Fund Fund Revolving Fund Fund Funds Fund Fund Fund Funds Funds Revenues / Sources Property Taxes Levy - Tax Capacity Operating 9,180,384$ -$ -$ 650,000$ 375,000$ 120,000$ 80,000$ 349,750$ 10,755,134$ -$ -$ -$ -$ 10,755,134$ Levy - Tax Capacity Debt Service 3,121,498$ 185,000 3,306,498$ 3,306,498$ Levy - Market Value 253,575 - - - - - - - 253,575 - - - - 253,575 Levy - - - - - - - - - - - - - - - Special Assessments - 446,370 - - - - 173,000 - - 619,370 - - - - 619,370 Licenses & Permits 795,551 - - - - - - - - 795,551 - - - - 795,551 Fines & Forfeits - - - - - - - - - - - - - - - Intergovernmental 2,095,735 - - - - - - - - 2,095,735 - - - - 2,095,735 Charges for Services 1,864,672 - 28,000 455,000 - - - - 8,450 2,356,122 4,411,774 4,317,042 1,190,699 9,919,515 12,275,637 Other Revenues 240,800 46,406 - 22,700 9,600 10,500 7,800 5,800 5,300 348,906 54,600 19,800 14,500 88,900 437,806 Bond Proceeds - - - - 555,000 - 163,200 - - 718,200 - - - - 718,200 Lease Proceeds - - - - - - - - - - - - - - - Transfers From Other Funds General Fund - 253,575 - - - - - - - 253,575 - - - - 253,575 Debt Service Funds - 75,000 - - - - - - - 75,000 - - - - 75,000 Water Fund 523,000 565,700 - - 145,000 - - 117,000 - 1,350,700 - - - - 1,350,700 Sewer Fund - - - - 145,000 - - 13,000 - 158,000 - - - - 158,000 Water Quality Fund - - - - 20,000 - - - - 20,000 - - - - 20,000 Trunk Reserve Fund - - - - - - - - - - - - - - - TIF Fund - 25,500 - - - - - - - 25,500 - - - - 25,500 PIR Fund - 287,150 - - - - - - - 287,150 - - - - 287,150 Facilities Management Fund - - - - - - - - - - - - - - - Capital Park Fund - - - - - - - - - - - - - - - Police Forfeiture Fund - - - - - - - - - - - - - - - Total Revenues / Sources 14,953,717$ 4,821,199$ 28,000$ 477,700$ 1,709,600$ 385,500$ 464,000$ 215,800$ 363,500$ 23,419,016$ 4,466,374$ 4,336,842$ 1,205,199$ 10,008,415$ 33,427,431$ Expenditures / Uses Employee Services 10,679,740$ -$ -$ -$ -$ -$ -$ -$ 135,422$ 10,815,162$ 825,245$ 807,538$ 366,593$ 1,999,376$ 12,814,538$ Current Expenditures 4,125,902 - - - - - - - 388,750 4,514,652 1,323,950 1,981,457 255,800 3,561,207 8,075,859 Capital Outlay 9,500 - - 1,781,000 595,000 - - 500 2,386,000 179,250 118,750 - 298,000 2,684,000 Capital Improvements - - - 400,000$ - - - 447,600 - 847,600 1,918,000 736,500 360,000 3,014,500 3,862,100 Subtotal 14,815,142$ -$ -$ 400,000$ 1,781,000$ 595,000$ -$ 447,600$ 524,672$ 18,563,414$ 4,246,445$ 3,644,245$ 982,393$ 8,873,083$ 27,436,497$ Transfers To Other Funds General Fund -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 208,000$ 208,000$ 107,000$ 523,000$ 523,000$ Treatment Plant (Debt)- - - - - - - - - - 565,700 - - 565,700 565,700 Equipment Fund - - - - - - - - - - 145,000 145,000 20,000 310,000 310,000 Park Equipment Fund - - - - - - - - - - - - - - - Debt Service Funds 253,575 75,000 - - - - 287,150 - - 615,725 - - - - 615,725 PIR Fund - - - - - - - - - - - - - - - Facilities Management Fund - - - - - - - - - - 117,000 13,000 - 130,000 130,000 EDA Fund - - - - - - - - - - - - - - - Severance Compensation Fund - - - - - - - - - - - - - - - Contingency - - - - - - - - - - - - - - - Debt Service - 5,243,627 - - - - - - - 5,243,627 169,650 169,650 - 339,300 5,582,927 Subtotal 253,575$ 5,318,627$ -$ -$ -$ -$ 287,150$ -$ -$ 5,859,352$ 1,205,350$ 535,650$ 127,000$ 1,868,000$ 7,727,352$ Total Expenditures / Uses 15,068,717$ 5,318,627$ -$ 400,000$ 1,781,000$ 595,000$ 287,150$ 447,600$ 524,672$ 24,422,766$ 5,451,795$ 4,179,895$ 1,109,393$ 10,741,083$ 35,163,849$ Change in Fund Balance (115,000)$ (497,428)$ 28,000$ 77,700$ (71,400)$ (209,500)$ 176,850$ (231,800)$ (161,172)$ (1,003,750)$ (985,421)$ 156,947$ 95,806$ (732,668)$ (1,736,418)$ 2021 Property Tax Levy Comparison 11/2 Council Workshop Attachment 1 Change 20 - 21 Property Taxes 2020 2021 Amount Percent Levy - Tax Capacity General Fund - Operating 8,711,099$ 9,180,384$ 469,285$ 5.39% Debt Service 3,319,231 3,306,498 (12,733) -0.38% Revolving Equipment Fund 625,000 650,000 25,000 4.00% Revolving Park Equipment Fund 319,000 375,000 56,000 17.55% Permanent Improvement Revolving Fund 80,000 120,000 40,000 50.00% Facilities Management Fund 30,000 80,000 50,000 166.67% Levy - Economic Dev Authority 274,750 349,750 75,000 27.30% 13,359,080 14,061,632 702,552 5.26% Levy - Market Value - General Fund 242,057 253,575 11,518 4.76% Total Levy 13,601,137$ 14,315,207$ 714,070$ 5.25% 2021 Budget Expenditure Comparisons (2020 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 2021 Total Expenditures / Uses 15,068,717$ 5,318,627$ -$ 400,000$ 1,781,000$ 595,000$ 287,150$ 447,600$ 524,672$ 24,422,766$ 5,451,795$ 4,179,895$ 1,109,393$ 10,741,083$ 35,163,849$ 2020 Total Expenditures / Uses 14,656,748$ 5,432,317$ 9,200$ -$ 1,200,000$ 346,000$ 979,933$ 114,000$ 453,135$ 23,191,333$ 3,401,315$ 3,465,196$ 819,692$ 7,686,203$ 30,877,536$ Change 2020 to 2021 ($)411,969$ (113,690)$ (9,200)$ 400,000$ 581,000$ 249,000$ (692,783)$ 333,600$ 71,537$ 1,231,433$ 2,050,480$ 714,699$ 289,701$ 3,054,880$ 4,286,313$ Change 2020 to 2021 (%)2.81%-2.09%-100.00%n/a 48.42%71.97%n/a 292.63%15.79%5.31%60.28%20.63%35.34%39.74%13.88% 2021 Budget Expenditure Comparisons (2020 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 2021 Total Expenditures / Uses 15,068,717$ 5,318,627$ -$ 400,000$ 1,781,000$ 595,000$ 287,150$ 447,600$ 524,672$ 24,422,766$ 5,451,795$ 4,179,895$ 1,109,393$ 10,741,083$ 35,163,849$ 2020 Total Expenditures / Uses 14,780,210$ 5,432,317$ 9,200$ -$ 1,460,183$ 542,000$ 979,933$ 234,000$ 453,135$ 23,890,978$ 3,427,595$ 3,491,476$ 819,692$ 7,738,763$ 31,629,741$ Change 2020 to 2021 ($)288,507$ (113,690)$ (9,200)$ 400,000$ 320,817$ 53,000$ (692,783)$ 213,600$ 71,537$ 531,788$ 2,024,200$ 688,419$ 289,701$ 3,002,320$ 3,534,108$ Change 2020 to 2021 (%)1.95%-2.09%-100.00%n/a 21.97%9.78%-70.70%91.28%15.79%2.23%59.06%19.72%35.34%38.80%11.17% 11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSEDCLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEFund 101 ‐ GENERAL FUNDTaxes 8,367,851                  8,953,156                  8,953,156                  9,433,959                  480,803                      5.37                             Charges for Services 1,832,896                  1,808,050                  1,808,050                  1,800,172                  (7,878)                         (0.44)                           Intergovernmental 1,925,225                  2,126,362                  2,126,362                  2,160,235                  33,873                        1.59                             Miscellaneous Revenues 454,862                      267,466                      267,466                      240,800                      (26,666)                       (9.97)                           Sale of assets 9,877                           ‐                                    ‐                                    ‐                                    ‐                                   Transfers in 456,300                      470,000                      470,000                      523,000                      53,000                        11.28                          Debt Issued‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Licenses and Permits 992,096                      830,464                      830,464                      795,551                      (34,913)                       (4.20)                           Fines and Forfeitures 996                               ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 101 14,040,103                14,455,498                14,455,498                14,953,717                498,219                      3.45                             DEBT SERVICE FUNDSTransfers in 1,345,091                  1,214,646                  1,214,646                  1,206,925                  (7,721)                         (0.64)                           Taxes 3,262,773                  3,319,231                  3,319,231                  3,121,498                  (197,733)                    (5.96)                           Miscellaneous Revenues 846,835                      546,395                      546,395                      492,776                      (53,619)                       (9.81)                           Debt Issued‐                                    ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ DEBT SERVICE FUNDS 5,454,699                  5,080,272                  5,080,272                  4,821,199                  (259,073)                    (5.10)                           Fund 210 ‐ CABLE FRANCHISE FUNDCharges for Services 28,901                        32,000                        32,000                        28,000                        (4,000)                         (12.50)                         Miscellaneous Revenues 2,849                           ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 210 31,750                        32,000                        32,000                        28,000                        (4,000)                         (12.50)                         Fund 225 ‐ CAPITAL PARK FUNDCharges for Services 309,190                      531,200                      531,200                      455,000                      (76,200)                       (14.34)                         Intergovernmental 100,000                       ‐                                    ‐                                    ‐                                    ‐                                   Miscellaneous Revenues 75,157                        26,800                        26,800                        22,700                        (4,100)                         (15.30)                         TOTALS ‐ FUND 225 484,347                      558,000                      558,000                      477,700                      (80,300)                       (14.39)                         BUDGET REPORTCity of Prior LakeRevenuesFrom Amended Budget 11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSEDCLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEBUDGET REPORTCity of Prior LakeRevenuesFrom Amended BudgetFund 240 ‐ EDA SPECIAL REVENUE FUNDTaxes 149,698                      274,750                      274,750                      349,750                      75,000                        27.30                          Charges for Services 10,120                        9,575                          9,575                          8,450                          (1,125)                         (11.75)                         Intergovernmental‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Miscellaneous Revenues 28,195                        7,560                          7,560                          5,300                          (2,260)                         (29.89)                         Transfers in‐                                   161,250                      161,250                       ‐                                   (161,250)                    (100.00)                       TOTALS ‐ FUND 240 188,013                      453,135                      453,135                      363,500                      (89,635)                       (19.78)                         Fund 410 ‐ REVOLVING EQUIPMENT FUNDTaxes 599,619                      625,000                      625,000                      650,000                      25,000                        4.00                             Taxes ‐ Debt Service‐                                    ‐                                    ‐                                   185,000                      185,000                      Intergovernmental‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Miscellaneous Revenues 39,019                        19,000                        19,000                        9,600                          (9,400)                         (49.47)                         Sale of assets 8,020                           ‐                                    ‐                                    ‐                                    ‐                                   Transfers in 160,000                      180,000                      180,000                      310,000                      130,000                      72.22                          Debt Issued 215,000                      115,000                      115,000                      555,000                      440,000                      382.61                        Other Financing Sources 40,040                         ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 410 1,061,698                  939,000                      939,000                      1,709,600                  770,600                      82.07                          Fund 430 ‐ REVOLVING PARK EQUIP FUNDTaxes 289,269                      319,000                      319,000                      375,000                      56,000                        17.55                          Miscellaneous Revenues 31,407                        9,000                          9,000                          10,500                        1,500                          16.67                          Transfers in‐                                    ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 430 320,676                      328,000                      328,000                      385,500                      57,500                        17.53                          Fund 440 ‐ FACILITIES MANAGEMENT FUNDTaxes‐                                   30,000                        30,000                        80,000                        50,000                        166.67                        Miscellaneous Revenues 17,605                        9,000                          9,000                          5,800                          (3,200)                         (35.56)                         Transfers in 94,927                        99,000                        99,000                        130,000                      31,000                        31.31                          Debt Issued‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Other Financing Sources‐                                    ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 440 112,532                      138,000                      138,000                      215,800                      77,800                        56.38                           11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSEDCLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEBUDGET REPORTCity of Prior LakeRevenuesFrom Amended BudgetFund 450 ‐ PERMANENT IMPROVEMENT REVOLVING FUNDTaxes 94,862                        80,000                        80,000                        120,000                      40,000                        50.00                          Miscellaneous Revenues 381,941                      311,867                      311,867                      180,800                      (131,067)                    (42.03)                         Transfers in‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Debt Issued 400,000                      490,000                      490,000                      163,200                      (326,800)                    (66.69)                         Other Financing Sources 48,709                         ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 450 925,512                      881,867                      881,867                      464,000                      (417,867)                    (47.38)                         Fund 601 ‐ WATER FUNDCharges for Services 6,595,240                  4,469,743                  4,469,743                  4,411,774                  (57,969)                       (1.30)                           Intergovernmental 573                               ‐                                    ‐                                    ‐                                    ‐                                   Miscellaneous Revenues 229,648                      42,000                        42,000                        54,600                        12,600                        30.00                          Sale of assets‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Transfers in 1,873,151                   ‐                                    ‐                                    ‐                                    ‐                                   Debt Issued‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Other Financing Sources 16,762                         ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 601 8,715,374                  4,511,743                  4,511,743                  4,466,374                  (45,369)                       (1.01)                           Fund 602 ‐ STORM WATER UTILITYCharges for Services 1,413,035                  1,166,677                  1,166,677                  1,190,699                  24,022                        2.06                             Intergovernmental‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Miscellaneous Revenues 50,111                        11,600                        11,600                        14,500                        2,900                          25.00                          Transfers in 267,517                       ‐                                    ‐                                    ‐                                    ‐                                   Storm Water Charges 750                               ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 602 1,731,413                  1,178,277                  1,178,277                  1,205,199                  26,922                        2.28                              11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021BUDGET ACTIVITY ORIGINAL AMENDED PROPOSED PROPOSED PROPOSEDCLASSIFICATION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEBUDGET REPORTCity of Prior LakeRevenuesFrom Amended BudgetFund 604 ‐ SEWER FUNDCharges for Services 5,642,999                  4,313,330                  4,313,330                  4,317,042                  3,712                          0.09                             Intergovernmental‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Miscellaneous Revenues 66,981                        21,000                        21,000                        19,800                        (1,200)                         (5.71)                           Sale of assets‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Transfers in 306,280                       ‐                                    ‐                                    ‐                                    ‐                                   Debt Issued‐                                    ‐                                    ‐                                    ‐                                    ‐                                   Other Financing Sources 16,762                         ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 604 6,033,022                  4,334,330                  4,334,330                  4,336,842                  2,512                          0.06                             TOTALS ‐ ALL FUNDS 39,099,139                32,890,122                32,890,122                33,427,431                537,309                      1.63                             537,309                      1.63                             From Original Budget 11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021ACTIVITY ORIGINALAMENDED PROPOSED PROPOSED PROPOSEDDEPT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEFund 101 ‐ GENERAL FUND41110.00 MAYOR & COUNCIL 70,144                       75,507                       75,507                       74,934                       (573)                           (0.76)                          41130.00 ORDINANCE 4,025                         7,500                         7,500                         6,000                         (1,500)                        (20.00)                        41320.00 ADMINISTRATION 528,999                     340,473                     340,473                     270,030                     (70,443)                      (20.69)                        41330.00 BOARDS & COMMISSIONS 8,719                         11,765                       11,765                       11,365                       (400)                           (3.40)                          41400.00 CITY CLERK FUNCTIONS 83,980                       116,283                     116,283                     122,150                     5,867                         5.05                           41410.00 ELECTIONS‐                                   34,231                       34,231                       7,000                         (27,231)                      (79.55)                        41520.00 FINANCE 480,575                     520,572                     523,612                     564,792                     41,180                       7.86                           41530.00 ACCOUNTING‐                                    ‐                                    ‐                                    ‐                                    ‐                                   41540.00 INTERNAL AUDITING 37,564                       35,475                       35,475                       41,200                       5,725                         16.14                         41550.00 ASSESSING 202,418                     218,704                     218,704                     224,260                     5,556                         2.54                           41610.00 LEGAL 152,275                     180,000                     180,000                     180,000                      ‐                                    ‐                             41820.00 HUMAN RESOURCES 187,118                     306,890                     306,890                     315,831                     8,941                         2.91                           41830.00 COMMUNICATIONS 126,561                     180,331                     180,331                     161,948                     (18,383)                      (10.19)                        41910.00 COMMUNITY DEVELOPMENT 328,190                     379,921                     379,921                     379,599                     (322)                           (0.08)                          41920.00 INFORMATION TECHNOLOGY 402,444                     438,494                     467,224                     384,873                     (82,351)                      (17.63)                        41940.00 FACILITIES ‐ CITY HALL 468,972                     505,598                     455,597                     523,936                     68,339                       15.00                         42100.00 POLICE 4,505,682                  4,848,910                  4,855,232                  5,299,447                  444,215                     9.15                           42200.00 FIRE 944,350                     1,038,440                  1,038,440                  1,076,237                  37,797                       3.64                           42400.00 BUILDING INSPECTION 594,466                     604,313                     676,314                     729,656                     53,342                       7.89                           42500.00 EMERGENCY MANAGEMENT 9,947                         14,875                       14,875                       15,090                       215                            1.45                           42700.00 ANIMAL CONTROL 28,200                       28,800                       28,800                       28,800                        ‐                                    ‐                             43050.00 ENGINEERING 348,296                     379,090                     379,090                     388,820                     9,730                         2.57                           43100.00 STREET 1,200,528                  1,338,286                  1,353,686                  1,364,953                  11,267                       0.83                           43400.00 CENTRAL GARAGE 412,844                     483,069                     483,069                     491,186                     8,117                         1.68                           45100.00 RECREATION 433,568                     474,059                     474,059                     481,578                     7,519                         1.59                           45200.00 PARKS 1,393,649                  1,623,071                  1,671,041                  1,603,233                  (67,808)                      (4.06)                          45500.00 LIBRARIES 62,047                       69,073                       69,073                       68,224                       (849)                           (1.23)                          46100.00 NATURAL RESOURCES‐                                    ‐                                    ‐                                    ‐                                    ‐                                   49999.00 CONTINGENT RESERVE‐                                    ‐                                    ‐                                    ‐                                    ‐                                   80000.00 Transfers to other Funds 334,769                     403,018                     403,018                     253,575                     (149,443)                    (37.08)                        TOTALS ‐ FUND 101 13,350,330               14,656,748               14,780,210               15,068,717               288,507                     1.95                           BUDGET REPORTCity of Prior LakeExpendituresFrom Amended Budget 11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021ACTIVITY ORIGINALAMENDED PROPOSED PROPOSED PROPOSEDDEPT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEBUDGET REPORTCity of Prior LakeExpendituresFrom Amended BudgetDEBT SERVICE FUNDS47000.00 DEBT SERVICE 5,359,651                  5,322,317                  5,322,317                  5,243,627                  (78,690)                      (1.48)                          80000.00 Transfers to other Funds 148,164                     110,000                     110,000                     75,000                       (35,000)                      (31.82)                        TOTALS ‐ DEBT SERVICE FUNDS 5,507,815                  5,432,317                  5,432,317                  5,318,627                  (113,690)                    (2.09)                          Fund 210 ‐ CABLE FRANCHISE FUND41340.00 PUBLIC CABLE ACCESS 20,263                       9,200                         9,200                          ‐                                   (9,200)                        (100.00)                      TOTALS ‐ FUND 210 20,263                       9,200                         9,200                          ‐                                   (9,200)                        (100.00)                      Fund 225 ‐ CAPITAL PARK FUND45040.00 PIKE LAKE PARK 917                            45144.00 THE ENCLAVE @ CLEARY LKPK45146.00 Eagle Creek/Brooksville Hills45147.00 MARKLEY LAKE TRAIL45148.00 HWY 13 TRAIL GAP 177,422                     45200.00 PARKS 325,858                      ‐                                    ‐                                   400,000                     400,000                     80000.00 Transfers to other Funds‐                                    ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 225 504,197                      ‐                                    ‐                                   400,000                     400,000                     100.00                       Fund 240 ‐ EDA SPECIAL REVENUE FUND46500.00 ECONOMIC DEVELOPMENT 167,478                     448,035                     448,035                     519,172                     71,137                       15.88                         46503.00 TECH VILLAGE INCUBATOR 4,075                         5,100                         5,100                         5,500                         400                            7.84                           TOTALS ‐ FUND 240 171,553                     453,135                     453,135                     524,672                     71,537                       15.79                          11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021ACTIVITY ORIGINALAMENDED PROPOSED PROPOSED PROPOSEDDEPT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEBUDGET REPORTCity of Prior LakeExpendituresFrom Amended BudgetFund 410 ‐ REVOLVING EQUIPMENT FUND42100.00 POLICE 187,092                     443,000                     468,580                     250,900                     (217,680)                    (46.46)                        42200.00 FIRE 620,150                     115,000                     115,000                     792,000                     677,000                     588.70                       42400.00 BUILDING INSPECTION 30,539                       32,000                       32,000                        ‐                                   (32,000)                      (100.00)                      43100.00 STREET 178,339                     257,000                     491,603                     289,600                     (202,003)                    (41.09)                        43400.00 CENTRAL GARAGE 18,739                       20,000                       20,000                       20,000                        ‐                                    ‐                             45200.00 PARKS 90,835                       333,000                     333,000                     262,500                     (70,500)                      (21.17)                        49400.00 WATER 55,549                        ‐                                    ‐                                   83,000                       83,000                       49420.00 WATER QUALITY‐                                    ‐                                    ‐                                    ‐                                    ‐                                   49450.00 SEWER‐                                    ‐                                    ‐                                   83,000                       83,000                       80000.00 Transfers to other Funds‐                                    ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 410 1,181,243                  1,200,000                  1,460,183                  1,781,000                  320,817                     21.97                         Fund 430 ‐ REVOLVING PARK EQUIP FUND45200.00 PARKS 158,797                     346,000                     542,000                     595,000                     53,000                       9.78                           TOTALS ‐ FUND 430 158,797                     346,000                     542,000                     595,000                     53,000                       9.78                           Fund 440 ‐ FACILITIES MANAGEMENT FUND41940.00 FACILITIES ‐ CITY HALL 10,349                        ‐                                   120,000                     240,000                     120,000                     100.00                       41960.00 GESP‐                                    ‐                                    ‐                                    ‐                                    ‐                                   42100.00 POLICE‐                                    ‐                                    ‐                                   22,500                       22,500                       42200.00 FIRE‐                                   20,000                       20,000                       120,000                     100,000                     500.00                       43100.00 STREET‐                                    ‐                                    ‐                                    ‐                                    ‐                                   43400.00 CENTRAL GARAGE‐                                    ‐                                    ‐                                   50,100                       50,100                       45500.00 LIBRARIES 32,637                       84,000                       84,000                       15,000                       (69,000)                      (82.14)                        49400.00 WATER 5,940                         10,000                       10,000                        ‐                                   (10,000)                      (100.00)                      80000.00 Transfers to other Funds‐                                    ‐                                    ‐                                    ‐                                    ‐                                   TOTALS ‐ FUND 440 48,926                       114,000                     234,000                     447,600                     213,600                     91.28                          11/2/2020 ‐ Council Workshop2019 2020 2020 2021 2021 2021ACTIVITY ORIGINALAMENDED PROPOSED PROPOSED PROPOSEDDEPT DESCRIPTION BUDGET BUDGET BUDGET AMT CHANGE % CHANGEBUDGET REPORTCity of Prior LakeExpendituresFrom Amended BudgetFund 450 ‐ PERMANENT IMPROVEMENT REVOLVING FUND43100.00 STREET 675,848                     700,000                     700,000                      ‐                                   (700,000)                    (100.00)                      80000.00 Transfers to other Funds 186,933                     279,933                     279,933                     287,150                     7,217                         2.58                           TOTALS ‐ FUND 450 862,781                     979,933                     979,933                     287,150                     (692,783)                    (70.70)                        Fund 601 ‐ WATER FUND41520.00 FINANCE 93,085                       100,574                     100,574                     108,124                     7,550                         7.51                           47000.00 DEBT SERVICE 78,200                        ‐                                    ‐                                    ‐                                    ‐                                   49400.00 WATER 2,871,712                  2,377,581                  2,403,861                  4,307,971                  1,904,110                  79.21                         80000.00 Transfers to other Funds 995,495                     923,160                     923,160                     1,035,700                  112,540                     12.19                         TOTALS ‐ FUND 601 4,038,492                  3,401,315                  3,427,595                  5,451,795                  2,024,200                  59.06                         Fund 602 ‐ STORM WATER UTILITY49420.00 WATER QUALITY 611,654                     733,912                     733,912                     982,393                     248,481                     33.86                         80000.00 Transfers to other Funds 126,760                     85,780                       85,780                       127,000                     41,220                       48.05                         TOTALS ‐ FUND 602 738,414                     819,692                     819,692                     1,109,393                  289,701                     35.34                         Fund 604 ‐ SEWER FUND41520.00 FINANCE 92,950                       100,274                     100,274                     107,599                     7,325                         7.30                           47000.00 DEBT SERVICE 78,200                        ‐                                    ‐                                    ‐                                    ‐                                   49450.00 SEWER 3,166,705                  3,070,812                  3,097,092                  3,706,296                  609,204                     19.67                         80000.00 Transfers to other Funds 527,147                     294,110                     294,110                     366,000                     71,890                       24.44                         TOTALS ‐ FUND 604 3,865,002                  3,465,196                  3,491,476                  4,179,895                  688,419                     19.72                         TOTALS ‐ ALL FUNDS 30,447,813               30,877,536               31,629,741               35,163,849               3,534,108                  11.17                         4,286,313                  13.88                         From Original Budget 1 2021 Proposed Tax Levy Components Attachment 2 LEVY CHANGE TO MAINTAIN CURRENT SERVICE LEVELS – 5.25% Mandatory Items – 3.86 % STAFFING Wage/COLA and Benefits - $357,000 The city has labor agreements with three unions that are currently being negotiated for 2021. The budget includes a proposed cost of living adjustment, city payroll taxes and health insurance premium contribution increase. The budget also includes seasonal salaries. Overtime Pay for City Contract Services - $94,000 The city provides contract services such as Police staffing at Mystic Lake and Police and Parks staffing at local community events such as Musicfest and Lakefront Days. The revenue is collected through a contract services charge and the related expenditure is staff overtime for the services provided. The contracted services are planned to increase in 2021 so the related staff overtime is also increasing. The increase is primarily in the Police department for additional contracted services at Mystic Lake. IT Support Specialist -$67,000 (PT to FT) The city has over 192 computer devices (workstations, laptops, 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. The city IT needs have expanded due to the COVID19 pandemic and made it more apparent that redundancy in the IT department is necessary. The City Manager has moved the part-time position to full-time in 2020 and the position is currently posted. By offering a full-time position with benefits, the city should be able to attract higher caliber candidates. This position would primarily serve the police department and provide helpdesk back up to the IT Coordinator. Pension Contribution - $78,000 City’s mandatory statutory Public Employees Retirement Association (PERA) contribution. Workers Compensation - $31,000 Premium adjustment based on updated experience modifier and rate changes from the League of MN Cities. 2 CURRENT EXPENDITURES Reduction in Contracted Services – ($48,000) Contracted Services Increases: • Increased funding for maintenance agreements for buildings/equipment/cleaning -$18k • Audit fee for required federal funds single audit - $6k • The City of Prior Lake contracts with Scott County to provide property assessment services. 2021 is the second year of a three-year contract. Overall contract increase includes increasing assessment workloads such as parcel creations, new home construction, and annexation activities - $6k • Increased funding for Public Works engineering needs. A significant 2021 project is feasibility work related to the Parks Master Plan - $30k • Increased funding for the city’s insurance program through the League of MN Insurance Trust based on annual updates to our property and general liability insurance coverage and proposed rate increase guidelines from the League of MN Cities – 19k • Increased funding for the Fire Dept. Special Response Team - $10k • Increased funding for website budget presentation software - $11k Contracted Services Decreases: • Reduction in funding for Parks expenditures for trail/sidewalk seal coat and heavy equipment rental – ($45k) • Reduction in funding for IT professional services. In 2021 staff will be added instead of contracting for these services as we did in 2020 – ($94k) • Reduction in funding for software service costs and Finance professional services –($9k) Reduction in Utilities – ($60,000) Utility expenditures based on historical info and estimated cost increases. Increase in 2019/2020 has been less than the budgeted estimate, so the budget was revised downward. Supplies - $17,000 tax levy impact • Police toughbooks, docking stations -$15k • IT Computers, video cameras, monitor replacements -$9k • Police and IT technology equipment became necessary to purchase in 2020 to allow for remote work and City Hall security during the COVID19 pandemic. This was funded by CARES $ - ($24k) • Streets snow & ice management materials - $17k CAPITAL OUTLAY Reduction in Tech Capital Outlay – ($68,000) • 2020 included the purchase of a server and storage area network –($68k) • 2021 IT network switch became necessary to purchase in 2020 to allow for increased server capacity to allow for remote work - $20k • 2021 IT technology equipment funded by CARES $ - ($20k) NONTAX REVENUE SOURCES/OTHER Net Reduction (Shortfall) of $130,000 offset with additional revenues • The city collects building permit and plan check revenue on new residential and townhome units built. The estimate for new construction for 2021 is 125 units which is less than the 2020 estimate of 135 units. This has a budgetary impact of $55k. The budget reflects a one-time funding from reserves of $35k to fund a portion of the revenue shortfall as compared to the 2020 budget as this is anticipated to be a “one-time” funding need. 3 Initial building permit projections at the start of the pandemic were 115 for 2020. That number has been revised to 140 based on the YTD permit activity through August. Staff has been conservative in the 2021 building permit estimate as there is uncertainty in the new housing market due to the pandemic. It is anticipated that this will be a “one-time” revenue shortfall based on the housing demand we have experienced prior to the COVD19 pandemic. ($55k revenue shortfall less use of reserves of $35k = $20k tax levy impact.) • City staff have been in discussions with the SMSC regarding the agreement for SMSC local government aid for Police services. The preliminary agreement indicates that we will receive $700,000 in 2020. However, this is $100k less than the 2021 budget amount of $800,000. The COVID19 pandemic has impacted Mystic Lake operations as it has impacted many businesses across the state. When Mystic Lake operations return to normal, we anticipate that the SMSC aid for Police services will include additional funding to move closer to our 2021 $850,000 funding recommendation. The budget reflects a one-time funding from reserves of $100k to cover this shortfall for 2021 police aid between budget and preliminary agreement received with the SMSC as this is anticipated to be a “one-time” funding need. ($0 tax levy impact) • The city collects revenue from cellular companies for leasing space on the city water towers. There is one less lease in 2021 so revenue budget has been reduced - $10k • Increase in funding from other funds for administrative services of the city’s operating fund for admin/HR/Finance/IT, etc. – ($53k) • Other expenditure adds across multiple depts for special election supplies/communications etc. -18k • The city was awarded a two grant for Building Official training - $65k • Increase in township fire & rescue aid revenue: We have proposed changes to the contract that include financing annual equipment replacement and facility repairs on a pay-go basis, financing major replacements and repairs with debt that follows the city’s debt repayment schedule of ten years, and funding for the city’s administrative costs of the Fire department. This will add $64,500 in revenue for fire and rescue aid to the townships which reduces the tax levy impact by $65k Other $ 325,000 2020 use of reserves 115,000 2021 use of reserves $ 210,000 Subtotal Increase in tax levy in 2021 due to less use of reserves as compared to 2020 budget (40,000) Reduction in 2021 current expenditures – one-time website redesign in 2020 (161,000) Reduction in General Fund transfers out to EDA – one-time transfer $ 9,000 Total Other – Net increase in tax levy Capital Improvement Program (CIP) Tax Levy Components 1.26% Street Overlay funding -$40,000 The fund is reviewed annually to monitor cash flow and determine the tax levy needed. No specific projects are identified at this time for 2021. Based on the increasing cost of recent years projects and impacts to the balance of the PIR fund, it is proposed to forgo overlay projects for the next three years to allow the fund to regenerate its balance. Staff is working towards the development of a more comprehensive pavement management program to 4 project longer term street network conditions and strategies for increasing the scope of street mill and overlay projects as early as 2024. Facilities Management Plan funding -$50,000 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 . 2021 includes replacement of the City Hall boilers and epoxy flooring replacement at Fire Station 1. Park Equipment Replacement funding -$56,000 The Revolving Park Plan funds capital replacement projects, park amenities, and trail, sidewalk and boardwalk replacement. The plan proposes a phased increase in the tax levy to cover the capital projects in the plan. 2021 projects include the Sunset Hills Park renovation and Watzl Beach building and retaining wall removal. Equipment Replacement funding - $25,000 The Equipment Replacement Plan (ERP) utilizes general tax levies to support r eplacement of the City’s equipment and vehicle fleet. The ten-year annualized cost for the plan is about $1M. The financing plan reflect s a gradual increase in the tax levy until the annual levy reaches $1M by the year 2028. The proposed total levy for 2020 is $650k. Since the proposed levy increase is gradual, bonding may be required for the plan to meet our funding needs. Economic Development Authority (EDA)Tax Levy Component .55% EDA Tax Levy Increase - $75,000 $ 364,000 EDA Source of Funds 525,000 EDA Use of Funds $ 161,000 EDA Use of Reserves The Economic Development Authority (EDA) has identified a need for additional expenditure budget and funding for economic development initiatives. The EDA budget includes a funding increase of $75k to bring the EDA tax levy to $350k The EDA has a commitment of approximately $388,000 in 2021 for the acquisition of the Sebastian Auto property as a part of a future downtown redevelopment project. With the tax levy set at $350,000, 2021 use of reserves of $160,000 will also be needed to help fund the 2021 EDA expenditures. 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 indu strial 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. General Fund Reserve General Fund use of reserves- $115,000 Background information: 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 the use of reserves for one-time expenditures or revenue shortfall; otherwise, the fund balance could drop below the level stated in the comprehensive financial management plan over time. The total 2020 use of reserves was $325k. This includes a planned transfer to the EDA ($161,250), the redesign of the city’s website ($40,000), and carryforward of 2019 budget items that were started in 2019 but completed/billed in 2020. ($124,000) 2021 Planned Use of Reserves is $115,000 to fund the following items: 5 • SMSC Police Aid Revenue Shortfall - $100k: The preliminary agreement with the SMSC indicates that we will receive $700,000 in 2021 for Police aid. This is an additional $50k as compared to 2020. However, this is $100k less than the 2020 budget amount of $800,000. The COVID19 pandemic has impacted Mystic Lake operations as it has impacted many business es across the state. When Mystic Lake operations return to normal, we anticipate that the SMSC aid for Police services will include additional funding to move closer to our 2021 $850,000 funding recommendation The budget reflects a one-time use of funds of $100k to cover this shortfall for 2021 police aid between budget and preliminary agreement received with the SMSC as this is anticipated to be a “one-time” funding need. • The city collects building permit and plan check revenue on new residential and townhome units built. The estimate for new construction for 2021 is 125 units which is less than the 2020 estimate of 135 units. This has a budgetary impact of $55k. The budget reflects a one-time funding from reserves of $35k to fund a portion of the revenue shortfall as compared to the 2020 budget as this is anticipated to be a “one -time” funding need • Offsetting add to reserve for overall nontax revenue $20k greater than to tal expenditures