HomeMy WebLinkAbout01(A) - 2022 Preliminary Budget and Tax Levy Report City of Prior Lake 2022 Council Workshop 8/2/2021
2022 Budget Attachment 1
Budgeted Funds Preliminary
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 10,003,394$ 3,455,529$ -$ -$ 700,000$ 405,000$ -$ 105,000$ 360,000$ 15,028,923$ -$ -$ -$ -$ 15,028,923$
Levy - Market Value 223,838 - - - - - - 223,838 - - - - 223,838
MVHC Aid - - - - - - - - - - - - -
Special Assessments - 457,042 - - - 150,731 - - 607,773 - - - - 607,773
Licenses & Permits 897,323 - - - - - - 897,323 - - - - 897,323
Fines & Forfeits - - - - - - - - - - - - -
Intergovernmental 2,539,881 - - - - 200,000 - 2,739,881 - - - - 2,739,881
Charges for Services 2,022,200 - 23,800 562,500 - 1,050,000 - 24,360 3,682,860 4,787,099 5,176,621 1,197,920 11,161,640 14,844,500
Other Revenues 257,200 38,162 - 46,000 6,800 13,800 5,700 6,300 5,400 379,362 67,400 31,200 22,800 121,400 500,762
Bond Proceeds - - - - - - - - - - .- -
Lease Proceeds - - - - - - - - - - - - - - -
Transfers From Other Funds
General Fund - 223,838 - - - - - - - 223,838 - - - - 223,838
Debt Service Funds - 233,000 - - - - - - - 233,000 - - - - 233,000
Water Fund 218,000 577,675 - - 108,750 - - 8,000 - 912,425 - - - - 912,425
Sewer Fund 218,000 - - - 108,750 - - 8,000 - 334,750 - - - - 334,750
Water Quality Fund 110,000 - - - - - - 8,600 - 118,600 - - - - 118,600
Trunk Reserve Fund - - - - - - - - - - - - - - -
TIF Fund - 25,500 - - - - - - - 25,500 - - - - 25,500
PIR Fund - 282,751 - - - - - - - 282,751 - - - - 282,751
Facilities Management Fund - - - - - - - - - - - - - - -
Capital Park Fund - - - - - - - - - - - - - - -
Police Forfeiture Fund - - - - - - - - - - -$ -$ -$ -
Total Revenues / Sources 16,489,836$ 5,293,497$ 23,800$ 608,500$ 924,300$ 418,800$ 1,206,431$ 335,900$ 389,760$ 25,690,824$ 4,854,499$ 5,207,821$ 1,220,720$ 11,283,040$ 36,973,864$
Expenditures / Uses
Employee Services 11,990,361$ -$ -$ -$ -$ -$ -$ -$ 143,057$ 12,133,418$ 879,448$ 869,955$ 356,339$ 2,105,742$ 14,239,160$
Current Expenditures 4,320,637 - - 3,200 - - - - 92,500 4,416,337 1,412,171 2,208,663 195,550 3,816,384 8,232,721
Capital Outlay 5,000 - - - 921,400 158,000 - - 385,000 1,469,400 191,000 290,200 - 481,200 1,950,600
Capital Improvements - - - - - - - 453,000 - 453,000 665,000 729,000 497,000 1,891,000 2,344,000
Subtotal 16,315,998$ -$ -$ 3,200$ 921,400$ 158,000$ -$ 453,000$ 620,557$ 18,472,155$ 3,147,619$ 4,097,818$ 1,048,889$ 8,294,326$ 26,766,481$
Transfers To Other Funds
General Fund -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 218,000$ 218,000$ 110,000$ 546,000$ 546,000$
Treatment Plant (Debt)- - - - - - - - - - - - - - -
Equipment Fund - - - - - - - - - - 108,750 108,750 - 217,500 217,500
Park Equipment Fund - - - - - - - - - - - - - - -
Debt Service Funds 223,838 233,000 - - - - 282,751 - - 739,589 577,675 - - 577,675 1,317,264
PIR Fund - - - - - - - - - - - - - - -
Facilities Management Fund - - - - - - - - - - 8,000 8,000 8,600 24,600 24,600
EDA Fund - - - - - - - - - - - - - - -
Severance Compensation Fund - - - - - - - - - - - - - - -
Contingency - - - - - - - - - - - - - - -
Debt Service - 5,360,912 - - - - - - - 5,360,912 169,850 169,850 - 339,700 5,700,612
Subtotal 223,838$ 5,593,912$ -$ -$ -$ -$ 282,751$ -$ -$ 6,100,501$ 1,082,275$ 504,600$ 118,600$ 1,705,475$ 7,805,976$
Total Expenditures / Uses 16,539,836$ 5,593,912$ -$ 3,200$ 921,400$ 158,000$ 282,751$ 453,000$ 620,557$ 24,572,656$ 4,229,894$ 4,602,418$ 1,167,489$ 9,999,801$ 34,572,457$
Change in Fund Balance (50,000)$ (300,415)$ 23,800$ 605,300$ 2,900$ 260,800$ 923,680$ (117,100)$ (230,797)$ 1,118,168$ 624,605$ 605,403$ 53,231$ 1,283,239$ 2,401,407$
2022 Property Tax Levy Comparison 2022 Council Workshop 8/2/2021Attachment 1
Change 21 - 22
Property Taxes 2021 2022 Amount Percent
Levy - Tax Capacity
General Fund - Operating 9,180,384$ 10,003,394$ 823,010$ 8.96%
Debt Service Funds 3,306,498 3,455,529 149,031 4.51%
Revolving Equipment Fund 650,000 700,000 50,000 7.69%
Revolving Park Equipment Fund 375,000 405,000 30,000 8.00%
Permanent Improvement Revolving Fund 120,000 - (120,000) -100.00%
Facilities Management Fund 80,000 105,000 25,000 31.25%
Levy - Economic Dev Authority 349,750 360,000 10,250 2.93%
14,061,632 15,028,923 967,291 6.88%
Levy - Market Value - General Fund 253,575 223,838 (29,737) -11.73%
Total Levy 14,315,207$ 15,252,761$ 937,554$ 6.55%
2022 Budget Expenditure Comparisons (2021 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
2022 Total Expenditures / Uses 16,539,836$ 5,593,912$ -$ 3,200$ 921,400$ 158,000$ 282,751$ 453,000$ 620,557$ 24,572,656$ 4,229,894$ 4,602,418$ 1,167,489$ 9,999,801$ 34,572,457$
2021 Total Expenditures / Uses 15,077,717$ 5,318,627$ -$ 956,000$ 1,816,000$ 525,000$ 287,150$ 447,600$ 524,794$ 24,952,888$ 5,451,795$ 4,179,895$ 1,109,393$ 10,741,083$ 35,693,971$
Change 2021 to 2022 ($)1,462,119$ 275,285$ -$ (952,800)$ (894,600)$ (367,000)$ (4,399)$ 5,400$ 95,763$ (380,232)$ (1,221,901)$ 422,523$ 58,096$ (741,282)$ (1,121,514)$
Change 2021 to 2022 (%)9.70%5.18%n/a n/a -49.26%-69.90%n/a 1.21%18.25%-1.52%-22.41%10.11%5.24%-6.90%-3.14%
2022 Budget Expenditure Comparisons (2021 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
2022 Total Expenditures / Uses 16,539,836$ 5,593,912$ -$ 3,200$ 921,400$ 158,000$ 282,751$ 453,000$ 620,557$ 24,572,656$ 4,229,894$ 4,602,418$ 1,167,489$ 9,999,801$ 34,572,457$
2021 Total Expenditures / Uses 15,331,421$ 5,318,627$ -$ 956,000$ 1,816,000$ 525,000$ 287,150$ 447,600$ 524,794$ 25,206,592$ 5,451,795$ 4,179,895$ 1,109,393$ 10,741,083$ 35,947,675$
Change 2021 to 2022 ($)1,208,415$ 275,285$ -$ (952,800)$ (894,600)$ (367,000)$ (4,399)$ 5,400$ 95,763$ (633,936)$ (1,221,901)$ 422,523$ 58,096$ (741,282)$ (1,375,218)$
Change 2021 to 2022 (%)7.88%5.18%n/a -99.67%-49.26%-69.90%-1.53%1.21%18.25%-2.51%-22.41%10.11%5.24%-6.90%-3.83%
The city is evaluating a proposal to adjust the city franchise fees to help fund the
maintenance of city streets at necessary levels. Residential property owners would see
a small increase in their monthly gas and electric bills with this change. The revenue
generated from these fees would be placed in a dedicated fund and used solely for
expenditures related to the maintenance of city streets.
franchise feesCITY OF PRIOR LAKE
miles of Streets in Prior Lake
Maintenance is critical for extending the usable life of city
streets to 50+ years and avoiding costly road replacement.
Prior Lake has 110 miles of street that require regular
maintenance, including crack sealing, chip sealing, mill and
overlay (the process of rejuvenating asphalt roads by milling
off the top 2 inches of the old asphalt and replacing it with new
material), and eventually complete reconstruction.
Earlier this year the city completed a Pavement Management
Plan. The plan found that the current level of maintenance is
insufficient to keep the city’s road conditions from further
deteriorating to unacceptable levels. The projected cost of
street maintenance in Prior Lake is estimated to be
approximately $95 million over the next 20 years or $5 million
annually.
WHY is this needed in Prior Lake?
Cities charge utility companies (electricity and natural gas) a
“franchise fee” for the use of city-owned, public right-of-way.
This fee is then passed on to utility customers. Many cities
across Minnesota use franchise fees to offset city expenses for
street maintenance that would otherwise go to the property tax
levy.
The City of Prior Lake’s franchise fees have remained
unchanged since 2006. The costs associated with maintaining
the city’s aging street infrastructure are climbing rapidly resulting
in the need to identify a sustainable funding source to support
Prior Lake’s road network. By increasing franchise fees and
dedicating the funds to street maintenance, the city would be
able to equitably distribute the financial burden of these costs
across all properties that generate traffic on our roads.
WHAT is a franchise fee?
J U L Y 2 0 2 1
million dollarseach year tomaintain PriorLake Streets
110
5
Public Information Meeting: Franchise Fees
Tuesday, July 27 @ 6:00 pm
City Hall
City Council Meeting: Franchise Fees Public Hearing
Monday, September 7 @ 7:00 pm
City Hall
City staff will host a public informational meeting on July 27, 2021. At this meeting, staff
will present more detailed information on the city’s street network, road conditions, future
improvements, and cost. To learn more about franchise fees and the city’s pavement
management program, you also may visit the city’s website: www.priorlakemn.gov
WHERE do I get more information?
WHEN would the franchise fee
begin?
The franchise fee adjustment would be
reflected in gas and electric bills beginning
in January 2022.
Contact Us:info@PriorLakeMN.gov (952) 447-9800
Prior Lake property owners currently pay a
total franchise fee of $3.00 per month
($1.50 on gas bills and $1.50 on electric
bills). The proposed adjustment would
increase the fee to $5.00 on gas bills and
$5.00 on electric bills. The fee would be a
flat increase to each residential property
owner. Commercial and industrial
businesses would pay a higher rate based
on their usage and meter sizes.
HOW much is the franchise fee?
Annual Impact
Franchise Fee
$84
Annual Impact
Tax Levy
$188
Franchise fees would have a lower annual
cost for Prior Lake homeowners compared
to increasing property taxes for street
maintenance.
For example, a
house costing
$600.000 would
pay less with a
franchise fee verses
a tax levy in 2022.
1
2022 Proposed Tax Levy Components
Attachment 3
LEVY CHANGE TO MAINTAIN CURRENT SERVICE LEVELS – 6.55%
Economic Development Authority (EDA)Tax Levy Component .07%
EDA Tax Levy Increase - $10,000
The EDA budget includes a funding increase of $10,000 to bring the EDA tax levy to $360,000. This is an incremental increase in
funding primarily for property taxes and maintenance costs for 2022 planned EDA owned properties including 4662/4662 Dakota St
SE and 16298 Main Ave SE.
Personnel Adds / New Funding – 4.94%
Police 2022 Impact of 2021 Mid-Year Wage
Adjustment - $251,000
Incremental increase related to the 2022 salary and benefits budget for the Police Department. A compensation study was
conducted and approved for 7/1/2021 market rate adjustments to the Officers and Sergeants salary schedules.
Assistant Fire Chief - $142,000 New position for 2022, included in Personnel Plan presented April 5, 2021. Budget includes salary and benefits.
Police Officer - $100,000 New position for 2022, included in Personnel Plan presented April 5, 2021. Budget includes salary and benefits.
Public Safety Workers Comp Rate Increase - $97,000 Premium adjustment based on updated experience modifier and rate changes from the League of MN Cities. Preliminary guidance
released included expectations of a 20% rate increase for public safety classes for 2022.
Receptionist - $67,000 New position for 2022, included in Personnel Plan presented April 5, 2021. Budget includes salary and benefits.
Community Development Assistant - $50,000 Conversion of seasonal to permanent part-time position for 2022, included in Personnel Plan presented April 5, 2021. Budget
includes salary and benefits.
Mandatory Items – 1.65%
STAFFING
Wage/COLA and Benefits - $275,000
The budget includes a proposed cost of living adjustment, city payroll taxes and health insurance premium contribution increa se.
The budget also includes seasonal salaries.
Health Insurance - $46,000 The city’s current health insurance provider indicated the city may see a premium increase of 10% for the 2022 insurance renewal.
Workers Compensation - $16,000
Premium adjustment based on updated experience modifier and rate changes from the League of MN Cities. Preliminary guidance
released included expectations of a 10% rate increase and potential reclassification for certain employee functions for 2022.
2
Election Judges - $54,000 An increase in election judges is needed due to an August primary election, the November general election, and ongoing early
voting.
CURRENT EXPENDITURES
Maintenance Agreements – $43,000
Increase in funding for maintenance agreements including general, building and equipment maintenance.
Property/General Liability Insurance - $22,000 Rate increase for property (10%) and general liability (12%) based on LMCIT guidance.
Professional Services - $58,000 increase in professional service costs for legal, engineering and the city’s assessment contract with Scott County.
Software Service Contracts – $15,000 New antivirus software and an increase in the Fire department’s timekeeping software.
Police Camera Technology Contract - $52,000 Estimated contract cost for a comprehensive Police camera technology contract that includes body camera, taser and video
storage. The current contract expires in 2022 and a new contract will cover a five-year period.
NONTAX REVENUE SOURCES/OTHER
Net Revenue increase of $742,000 offset with Levy
Impact of Change in Use of Reserves from 2021 to
2022 of $278,000
$328,000 2021 General Fund use of reserves for recurring items
50,000 2022 General Fund use of reserves
$278,000 Levy impact of Change in Use of Reserves between yrs.
• $205k for additional building permit and plan check revenue. The city collects building permit and plan check revenue on
new residential and townhome units built. The estimate for new construction for 2022 is 150 units which is more than the
2021 estimate of 125 units. As we wind down from the pandemic impacts and evaluate the property available for
development, staff has adjusted the annual building permits estimate to 150/year for the foreseeable future.
• $300k for additional SMSC Police Aid. The financial plan includes an incremental increase in SMSC aid for Policing which
will be adjusted, as needed, based on the agreement between the SMSC Business Council and the City Council. The
proposed increase for 2022 is $300k bringing the total SMSC police aid contribution to $1,000,000 in 2022.
• $82k for additional Minnesota state aid for Street Maintenance, Police and Fire including an estimated increase for the
2022 police officer and assistant fire chief staff additions.
• $31k Fire & Rescue Services Revenue from Townships: The costs for the Assistant Fire Chief are included in the cost
calculation for the Fire & Rescue Services agreement with Credit River and Spring Lake Townships.
• $27k for facility rent from the Prior Lake Spring Lake Watershed District (PLSLWD) for the space they are leasing at City
Hall.
• $278k increase in tax levy for on-going expenditures/revenue that were funded with reserves in the prior year. The 2021
use of reserves for ongoing revenue/expenditure items of $327,750 is comprised of the following:
o $100,000 shortfall in SMSC Police aid
o $24,000 reduction in the estimate of building permit and plan check revenue
o $63,000 Police overtime adjustment
o $23,750 Police workers compensation adjustment
o $117,000 Police midyear wage adjustment
2022 Planned Use of Reserves is $50,000 to fund the following items:
o Community Survey – The survey is completed every three to five years and planned to be funded from reserves.
GENERAL FUND RESERVE
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.
3
The total 2021 use of reserves is $1,127,704 comprised of the following items:
$849,955 of the use of reserves was for the following one-time items:
• $800,000 for a planned transfer of ARPA funds to the Facilities Management Fund for future projects
• $17,600 for professional services for a city compensation study
• $32,355 for purchase of Police field equipment
$277,750 of the use of reserves was for recurring items. In 2022, tax levy is needed to fund these items that were funded with
reserves in 2021:
• $100,000 shortfall in SMSC Police aid
• $24,000 reduction in the estimate of building permit and plan check revenue
• $63,000 Police overtime adjustment
• $23,750 Police workers compensation adjustment
• $117,000 Police midyear wage adjustment
2022 Planned Use of Reserves is $50,000 to fund the following items:
• Community Survey – The survey is completed every three to five years and planned to be funded from reserves.
Capital Improvement Program (CIP) Tax Levy Components - (.10%)
Equipment Replacement funding - $50,000 The Equipment Replacement Plan (ERP) utilizes general tax levies to support replacement of the City’s equipment and vehicle fleet.
The ten-year annualized cost for the plan is about $1.38M. The financing plan reflects a gradual increase in the tax levy until the
annual levy reaches $1M by the year 2028. The proposed total levy for 2022 is $917k. Since the proposed levy increase is gradual,
bonding may be required for the plan to meet our funding needs.
Park Equipment Replacement funding -$30,000 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. 2022 projects include the Northwood
playground replacement and the Crystal Lake aerator.
Facilities Management Plan funding -$25,000
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. 2022 includes carpet and minor renovations at the Police Station, roof work at the salt building and
renovations for the duty crew at Fire Station 1.
Street Overlay funding – ($120,000)
The fund is reviewed annually to monitor cash flow and determine the tax levy needed. No specific projects are identified at this
time for 2022. Based on the estimated cost of $5,000,000 a year to maintain city streets, staff has proposed the increase in the
city’s current gas and electric franchise fee from $1.50 each to $5.00 each and dedication of the funding to the city’s pavement
management plan. See Attachment 3 Franchise Fee Flyer for more detailed information. This additional funding will support the
maintenance of the street network conditions as part of the pavement management program. With the planned increase in the
franchise fee revenue starting in 2020, a separate PIR Fund/Street Overlay tax levy is not needed in 2022.
4646 Dakota Street SE
Prior Lake, MN 55372
2022 Budget & Capital Improvement Program Schedule
NOTE: All Highlighted Meetings Open to the Public
February 16 Council Workshop – Pavement Management Plan
March 1 Dept. Heads submit large budget item requests to Finance
April 5 Council Workshop – Personnel Plan
April 19 Council Workshop – Review General Fund Reserves and Proposed Uses to align
with Strategic Initiatives
April 30 CIP Plan updates completed by city staff
1. Transportation Plan/Street Overlay Plan
2. Water Operating Plan
3. Sewer Operating Plan
4. Water Quality Operating Plan
5. Equipment Replacement Plan
6. Park Plan
7. Facilities Management Plan
8. Technology Plan
May 15 Budget instructions provided to Dept. Heads
Approximately
May 15-31 (After
2020 Audit is
Completed &
Closed in BS&A.)
Dept. Heads submit budget requests to Finance through the financial system
June 1 – June 15 City Manager, Finance and Staff budget review
June 7 Council Workshop – Long-Range Plan (Establish 2022 levy target)
June 21 Council Workshop –2022-2026 CIP Presentation
August 2 Council Workshop – Closed Session – Labor Contract Negotiations
August 2 Council Workshop – Preliminary 2022 Budget/Tax Levy Discussion/CIP Debt
Impacts
August 16 Council Meeting – CIP Public Presentation/Adopt CIP
September 7 Council Meeting – Adopt Preliminary Tax Levy and announce public budget hearing
date
November 1 Council Workshop – Final 2022 Budget/Tax Levy Discussion (30 minutes)
December 6 Council Meeting – Public Budget Hearing and Adopt 2022 Budget and Tax Levy