The URL can be used to link to this page

Home My WebLink About10A - Proposed 2007 City Budgets MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: I' ,""1 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT SEPTEMBER 5, 2006 10A Ralph Teschner, Finance Director CONSIDER APPROVAL OF A RESOLUTION ADOPTING PROPOSED 2007 CITY BUDGETS AND CERTIFYING PRELIMINARY 2007 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION AND DETERMINING WHETHER THE CITY SHOULD CONDUCT A TRUTH-IN-TAXATION HEARING Introduction Truth in Taxation statutes require that each "taxing authority" adopt a proposed budget and certify a preliminary tax levy for payable 2007 property taxes to the Scott County Department of Taxation on or before September 15, 2006. The attached resolution would fulfill this statutory requirement. The purpose of this statutory requirement is to allow the County adequate time to prepare, calculate and mail "Truth in Taxation" notices of proposed property taxes for the county, school district, city and special taxing districts to taxpayers. Historv The Council conducted its first 2007 budget workshop on May 1, 2006. The discussion that took place was fairly general. The objectives of the proposed 2007 general operating budget were reviewed along with possible program additions. Also, the City Council was approached as to any specific service priorities that should be incorporated into the budget for 2007. At the conclusion of the first budget study session, Council direction was for Staff to prepare an operating budget for 2007 that would accomplish these primary objectives while minimizing the property tax impact. Following this session the Council conducted its initial review of the proposed 2007 budget requests, including the general, water and sewer and transit enterprise fund budgets, at its second workshop on August 21, 2006. An explanation of the proposed property tax levy was reviewed along with an explanation of new proposed budget expenditures. The Council acknowledged the budget to be responsive to community needs recognizing the fact that program growth, including capital expenditures associated with the Capital Improvement Program, is for the most part funded either by enhanced revenue sources or taxes generated by new valuation growth experienced by the city. Current Circumstances One subsequent change was made to the budget since our workshop meeting. Staff has been informed that four (4) additional dedicated phone lines are necessary as part of the City Hall/Police Station buildings. Each building requires a dedicated phone line for the fire alarm systems and elevators at a cost of $60.00/month per phone line. As a result, the budget has been modified by an additional $2,880.00. www.cityofpriorlake.com Phone 952.447.4230 / Fax 952.447.4245 The draft 2007 budget and the property tax levy it requires have the following characteristics: · The property tax impact on a $280,000 market value home is estimated to be 2.03% or less than $17 per year. · The total property tax levy (not taxes) proposed for all funds represent an increase of 4.48%. · The budgets as proposed provide for a continuation of services at existing levels and for improvements in certain areas. · No new personnel positions are proposed. · The proposed 2007 budgets continue the focus of the Prior Lake 2030 Vision and Strategic Plan. Outlined below are the major items that represent nearly 80% of the operational increase within the proposed 2007 General Fund Budget. New or increased 2007 oDerational eXDenses*: 1. Webcasting 2. State pension increase mandate 3. County-wide transportation strate~ 4. Assessing contract 5. Property/liability insurance 6. New building utilities increase 7. Fuel increase 8. Educational contract costs 9. Drug task force 10. Street overlay program increase Total.. . $8,000.00 $27,000.00 $20,000.00 $10,000.00 $20,000.00 $50,000.00 $30,000.00 $18,000.00 $8,000.00 $50,000.00 $241,000.00 * rounded Truth-in-Taxation Hearino Process: An exemption from the public hearing and publication requirements is provided if a city's total proposed property tax levy does not exceed its previous year final property tax levy by more than the percentage increase in the implicit price deflator (IPD). For levy year 2006, taxes payable 2007, this percentage increase in the IPD is 6.4187%. This threshold is established by state statute and is considered an acceptable level of increase in the property tax levy which cities would need to support typical increases within their operating budgets. Because our proposed property tax levy increase for 2007 is considerably less at 4.4834% we are not required to conduct a TNT hearing however the Council may wish to do so anyway to provide residents the opportunity for comment and input into the budget process. If the Council concurs, direction should be given to Staff so that the appropriate TNT steps are followed. ISSUES: The attached resolution incorporates a proposed 2007 General Fund Operating Budget of $11,415,807 representing a 5.30% increase above the current year. A "Budget Summary" showing the increases/decreases of each respective department is attached. Overall, the proposed "preliminary" tax levy of $8,448,777 is comprised of the following elements: ImPurDose Amount I 1. Generallevy $5,929,130.00 I 2. Referendum debt levies $761,949.00 3. Building bonds levy $565,735.00 4. I Revolving Equipment Fund levy $290,000.00 5. Existing CIP special debt levies $749,0_9.Q=~ 6. 2006 CSAH 82 appropriation levy $152.963.00 Total Property Tax LevyT$8,448,777.00.' This preliminary levy does not reflect any additional property tax that would be associated with the general obligation bonds necessary to finance the new fire station and platform fire truck if the referendum on September 12th were successful. The initial property tax levy certification for 2007 as approved this evening may only be adjusted downward with the exception of any referendum approved increase which is a legal "add-on levy". FINANCIAL IMPACT: Attached to this agenda report is an updated "Property Tax Impact Analysis" that incorporates the estimated tax capacity valuation prepared by the Scott County Department of Taxation for payable 2007. The new analysis includes the finalized fiscal disparities distribution. This valuation assumes market value increase due to appreciation, new housing construction and all value relating to improvements such as additions, etc. The "Property Tax Impact Analysis" compares a residential home in 2006 adjusted by an average market value rise of 10% for payable 2007 property taxes. As shown on the "Property Tax Impact Analysis" the projected annual city property tax based upon the estimated 2007 tax capacity value, would be $845.59 on a $280,000 market value home in Prior Lake. This reDresents a 2.03% increase or S16.79 for the year in city DrODertv taxes from 2006 to 2007. Individual property tax amounts will be subject to slight variations from these estimates depending upon inflationary market value adjustment increases as determined by the county assessor's office. City council members are aware that the typical estimated City tax increase in 2006 was 5.62%, 1.78% in 2005 and an actual reduction of <.25%> for 2004. When viewed over a multiyear period, the City's annual tax levy increases have mirrored the average rate of inflation of 2.29% for the past 4 years. As a growing city, it is not unreasonable to expect that service delivery and capital investment costs will increase. Resolution 06-xxx identifies the various city budgets and delineates the preliminary 2007 property tax levy breakdown. If the Council elects to do so the City will hold a formal Truth in Taxation public hearing this year on Monday December 4, 2006 at 6:00 p.m. to receive public comment. Otherwise the Council will consider the budget and property tax levy as a regular scheduled H. \6 U DGET\07 orei i III b ud rpt. doc agenda item at its December 4th council meeting. ALTERNATIVES: The following alternatives are available to the City Council: 1. Approve Resolution Adopting Proposed 2007 City Budgets and Certifying Preliminary 2007 City of Prior Lake Property Tax Levy to Scott County Department of Taxation as submitted. 2. Amend resolution to an amount determined by the City Council. RECOMMENDED MOTION: Staff would recommend Alternative #1. The Council may make alternative adjustments between now and its final levy determination that must be certified in late December. Rerwed b'f: .,J ~ Frank BOYle~ty M1ager ATTACHME~ 1. Resolution Adopting Proposed 2007 City Budgets and Certifying Preliminary 2007 City of Prior Lake Property Tax Levy to Scott County Department of Taxation 2. Budget Summary 3. Property Tax Impact Analysis H .\BIJ DGET\07prelilllbudrpt. doc A RESOLUTION ADOPTING PROPOSED 2007 CITY BUDGETS AND CERTIFYING PRELIMINARY 2007 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION MOTION BY: SECOND BY: WHEREAS, Truth in taxation provisions as specified by state statute requires the Prior Lake City Council to certify a proposed property tax levy to the Scott County Department of Taxation. WHEREAS, The City Council of the City of Prior Lake anticipates a 2007 General Fund Operating Budget increase of approximately 5.3%, which would amount to $11,415,807.00, and subject to approval by the City Council at its budget adoption proceeding scheduled for December 18, 2006. WHEREAS, The City of Prior Lake's proposed 2007 Enterprise Fund budgets total an aggregate $4,590,757.00 which includes the Water & Sewer Utility, Water Quality Utility and Transit Services. WHEREAS, The total proposed property tax levy approved has been determined to be $8,448,777.00. WHEREAS, The City of Prior Lake hereby certifies that the levy certification rate will increase for payable 2007 property taxes. WHEREAS, The proposed City of Prior Lake property tax levy for the year payable 2007 represents an increase of 4.48%. WHEREAS, The City Council will consider the 2007 General Operating Budget, Enterprise Fund Budgets and the Final 2007 Property Tax Levy during its regularly scheduled council meeting at 6:00 p.m. on Monday December 4, 2006 at 16776 Fish Point Road, Prior Lake with a continuation (if necessary) at 6:00 p.m. on December 11, 2006. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE that: 1. The recitals set forth above are incorporated herein. 2. That the proposed tax levy be distributed upon the taxable property in said City for the following purposes in payable 2007: PurDose Amount * For General City Purposes Revolving Equipment Fund G.O. Improvement Bonds '97 (Pike Lake) $5,929,130.00 $290,000.00 $56,000.00 * * ~-i.\E:UDGET www.cityofpriorlake.com Phone 952.447.4230 / Fax 952.447.4245 * G.O. Improvement Bonds '98 (Duluth) $58,000.00 * G.O. Improvement Bonds '99 (Candy Cove) $55,000.00 * G.O. Improvement Bonds '00 (Oak Ridge) $71,000.00 * G.O. Improvement Bonds '01 (Frog Town) $59,000.00 * G.O. Improvement Bonds '02 (Pixie Point) $59,000.00 * G.O. Improvement Bonds '03 (150th Street) $106,000.00 * G.O. Improvement Bonds '04 (Breezy Point) $185,000.00 * G.O. Improvement Bonds '05 (Fish Point) $100,000.00 * G.O. Building Bonds '05 (EDA) $565,735.00 * CSAH 82 Improvement '06 $152,963.00 ** Fire Hall Referendum Bonds '93 $170,540.00 ** Park Referendum Bonds '97 $591.409.00 Total... $8,448,777.00 Note: Single starred funds shall be spread over the entire consolidated City of Prior Lake. Note: Double starred funds represent market value based referendum taxes and shall be spread over the entire consolidated City of Prior Lake. Note: All other bond issues have sufficient fund balances to cover debt requirements. Passed and adopted this 5th day of September, 2006. YES NO Haugen Dornbush Erickson LeMair Millar Haugen Dornbush Erickson LeMair Millar {Seal} City Manager City of Prior Lake H :\BUDGEn07prelimbudres.doc "BUDGET SUMMARY" DETAILED DIFFERENCE BETWEEN ACTUAL 2006 AND PROPOSED 2007 GENERAL FUND BUDGET Denartment '06 Budm '07 pro nosed % Chan~ $ Chan~ 41110 Mayor & Council $61,487 $61,927 0.72% $440 41130 Ordinance $12,000 $12,000 0.00% $0 41320 City Manager $347,407 $384,438 10.66% $37,031 41330 Boards & Commissions $13,337 $13,337 0.00% $0 41410 Elections $15,356 $5,565 -63.76% -$9,791 41520 Director of Finance $125,666 $126,848 0.94% $1,182 41530 Accounting $162,658 $168,240 3.43% $5,582 41540 Internal Auditing $17,100 $18,200 6.43% $1,100 41550 Assessing $92,100 $102,200 10.97% $10,100 41610 Law $283,000 $298,000 5.30% $15,000 41820 Personnel $98,478 $75,799 -23.03% -$22,679 41830 Communications $129,131 $131,974 2.20% $2,843 41910 Planning & Zoning $333,259 $350,713 5.24% $17,454 41920 Data Processing $160,735 $142,550 -11.31 % -$18,185 41940 Buildings & Plant $293,395 $329,737 12.39% $36,342 42100 Police $2,603,682 $2,802,295 7.63% $198,613 42200 Fire & Rescue $611,261 $668,649 9.39% $57,388 42400 Building Inspection $499,989 $526,660 5.33% $26,671 42500 Civil Defense $27,300 $27,300 0.00% $0 42700 Animal Control $31,200 $33,228 6.50% $2,028 43050 Engineering $556,403 $542,430 -2.51 % -$13,973 43100 Street $775,672 $883,527 13.90% $107,855 43400 Central Garage $271,839 $283,243 4.20% $11,404 45100 Recreation $380,113 $391,115 2.89% $11,002 45200 Parks $1,185,130 $1,243,522 4.93% $58,392 45500 Libraries $89,795 $97,485 8.56% $7,690 46500 Economic Development $173,206 $167,141 -3.50% -$6,065 47000 Debt Service $1,290,035 $1,327,684 2.92% $37,649 49999 Contingency Reserve $200,000 $200,000 0.00% $0 General Fund $10,840,734 $11,415,807 5.30% $575,073 * Page numbers references spreadsheet trend of historical expenditures (YELLOW SHEETS) BUDSUMXLS Page 1 812412006 BUDGET SUMMARY RECAP: '06 Budm '07 Prooosed % 41000 GENERAL GOVERNMENT $2,145,109 $2,221,528 3.56% 42000 PUBLIC SAFETY $3,773,432 $4,058,132 7.54% 43000 PUBLIC WORKS $1,603,914 $1,709,200 6.56% 45000 CUL TORE-RECREATION $1,655,038 $1,732,122 4.66% 46000 ECONOMIC DEVELOP. $173,206 $167,141 -3.50% 47000 DEBT SERVICE $1,290,035 $1,327,684 2.92% 49999 CONTINGENCY RESERVE $200.000 $200.000 0.00% General Fund $10,840,734 $11,415,807 5.30% BUDGET BREAKDOWN: '06 Budm '07 Prooosed % of Total % Chan~ Personal Services $6,296,886 $6,524,318 57.15% 3.61% Current Expenses $2,824,068 $3,136,136 27.47% 11.05% Capital Outlay $229,745 $227,669 1.99% -0.90% Debt Service $1,290,035 $1,327,684 11.63% 2.92% Contingency Reserve $200.000 $200.000 1.75% 0.00% Total $10,840,734 $11,415,807 100.00% 5.30% DETAILED DIFFERENCE BETWEEN ACTUAL 2006 AND PROPOSED 2007 ENTERPRISE FUND BUDGETS Deoartment '06 Prooosed '07 Prooosed % Chan~ $ Chanpe 49400 Water Utility $1,001,802 $1,557,693 55.49% $555,891 49450 Sewer Utility $1,954,502 $2,121,031 8.52% $166,529 49420 Water Quality Utility $355,926 $330,454 -7.16% -$25,472 49804 Transit Services $592.068 $581.579 -1. 77% -$10.489 Enterprise Funds $3,904,298 $4,590,757 17.58% $686,459 BUDSUM.XLS Page 2 8/28/2006 ESTIMATED 2007 PROPERTY TAX IMPACT ANALYSIS ... (8/24/06) ACTUAL Collection Property Taxable Referendwn Actual Tax Tax Capacity Market Value Residential Market Value Home Year Tax Levy Market Value Market Value Capacity Value Rate Rate $200,000 $250,000 $300,000 $350,000 $400,000 Tax Capacity 2006 $6,722,656 $2,13 1,027,400 $2,110,033,600 $21,452,916 31.3368% 0.0356% Value $2,000 $2,500 $3,000 $3,500 $4,000 (referendwn levy) $751,300 $1-471956 general tax $626.74 $783.42 $940.10 $1,096.79 $1,253.47 (fiscal disparities) ($612,280) m.v. tax $71.21 $89.02 $106.82 $124.62 $142.42 Gross Levy $8,086,236 m.v. credit -$56 95. -$43.63 -$30.31 -$1699 -$3.67 total... $641.00 $828.80 $1,016.61 $1,204.42 $1,392.23 PROPOSED Collection Year :\"t'~.;j Tax Levv Est. Taxable Market Value 2007 ( referendwn levy) $7,053,809 $761,949 ~UI5.758 ($633,019) $8,448,777 $2,495,870,476 (fiscal disparities) Gross Levy FOOTNOTES: Scott County TNT Values @ 8/3/06: $2,425,256,100 2007 est. taxable market value $24,898,019 2007 est. tax capacity value $612,280 2007 est. fiscal disparities aid . Est. Referendwn Est. Tax Tax Capacity Market Value Market Value Capacity Value Rate Rate Residential Market Value Home · $224,000 $280,000 $336,000 $392,000 $448,000 $2,425,256, I 00 $24,898,019 28.3308% 0.0314% Tax Capacity Value $2,240 $2,800 $3,360 $3,920 $4,480 general tax $634.61 $793.26 $951.92 $1,110.57 $1,269.22 m.v. tax $70.37 $87.97 $105.56 $123.16 $140.75 m.v. credit .$505(1 .$3564 -$20.72 -$580 $0.00 total... $654.43 $845.59 $1,036.76 $1,227.92 $1,409.97 $ I\"t'~.;j Tax Increase $13.43 $16.79 $20.15 $23.50 $17.74 % P.u..~..j Tax Increase 2.10% 2.03% 1.98% 1.95% 1.27"10 Payable 2007 Median Value Residential Home $258,900 ave. EMV taxable market inflation - 12% inc. .. city portion of $304 market value credit = est. ..2960% (market value credit reduced by .09% for each $100 of value exceeding $76,(00) Levv Components: $5,929,130 Budget levy $761,949 Referendwn debt levy $749,000 CIP debt levy $565,735 Building debt levy $290,000 Revolving Equipment Fund levy $152.963 CSAH 82 appropriation levy $8,448,777 Budget Comparison: $11,415,807 Proposed 2007 Budget iJO-840.734 Actual 2006 Budget $575,073 5.30% increase " _, .77 Payable 2007 Ayeraae Value Residential Home $308,300 .....' "''''PJIIII24I2OlIIl