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Home My WebLink About10A - Proposed 1999 City of Prior Lake Tax Levy STAFF AGENDA REPORT SEPTEMBER 8, 1998 lOA RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF RESOLUTION 98-XX CERLLJ:<YING PROPOSED 1999 CITY OF PRIOR LAKE TAX LEVY TO SCOTT COUNTY AUDITOR DISCUSSION: Truth in Taxation stahItes require that each "taxing authority" adopt _ __L., a proposed budget and certify a proposed tax levy for payable 1999 to the County Auditor on or before September 15, 1998. The purpose 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 budget workshop on June 1, 1998. The discussion that took place was fairly general. Staff discussed with the Council that approximately $88,000 in expenditure reduction measures had been made by Staff before the budget process for 1999 began. These actions were primarily the result of the following three factors: 1. Building Pennit Revenue Shortfall. a) Projected pennit reduction from 275 to 225 in 1999 b) Projected revenue reduction of$41,000. 2. Tax Base Growth Rate Decline a) 21 % drop, from $34,178,400 to $27,139,200, in new residential market valuation from 1996 to 1997 which provides for our 1999 tax base increase. 3. Pronertv Tax Rate Comnression - - - a) Effect will shift a higher proportion of property taxes from commercial/industrial to residential homes. At the conclusion of the first budget study session, Council direction was for Staff to prepare an operating budget for 1999 that would result in a net property tax increase of zero. The premise was that all program growth including capital expenditures associated with the recently approved 1999 Capital Improvement Program, be funded by revenues created by new valuation growth in the community. Tax levy increases associated with voter referendum 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER H:\BUDGETlPREAGRPT.DOC debt and the step-up to the full transit levy amount were to be excluded from the City Council's property tax limit calculation. Budget Session II was conducted on August 11, 1998. Discussion revolved around the list of programs that were excluded from the proposed budget because of the Council's direction to achieve a net property tax increase of zero. A list of desirable programs that a majority of the Council supported was prepared which included the following: · Seasonal Program Specialist · Additional Summer Playground Site · Southwest Metro Drug Task Force · Geographic Information System Software · Central File System (initial yr. lease pmt) · Street Crack Sealing · Street Sea1coating $2,000 $2,000 $8,000 $10,000 $10,000 $20,000 $40.000 $92,000 After Staffs presentation and City Council discussion, the study session was extended to August 25, 1998. The direction from the 8/25 meeting was for Staff to examine the proposed 1999 budget in an effort to include, if possible, the above programs with no dollar Increase. Current Circumstances: In response to the Council's direction the Staff is making the following recommendations: ACTION STEPS BUDGET Elffl'ECT 1. Reduce contingency account 2. Reduce litigation budget from $3500/mo.- $2500/mo. 3. Increase crack sealing/sealcoating allocation from $15,000 to $50,000 4. Geographic Information System Software appropriation of $10,000 from Trunk Reserve 5. Miscellaneous adjustments <$25,000> <$12,000> $35,000 no impact <$8,500> As a result, the proposed 1999 Operating Budget of $7,116,582 represents a 4.19% increase above the current year. A Budget Summary has been prepared showing the increases/decreases of each respective department along with a document (entitled 1999 Budget Program Emphasis) identifying major budget results. The largest single component affecting the budget was the increase in the Transit Service levy. This is a pass through levy from the Metropolitan Council to the City and has net zero impact upon Prior Lake taxpayers. H:\BUDGETlPREAGRPT.DOC Personnel requests for 1999 in the general fund-actually represent a decrease of 1.25 FTE positions below 1998 levels. A secretary in the Police Department and seasonal intern within the engineering department have been cut. No new positions were requested. Wages are projected to rise by approximately 3% due to contract required step increases and union wage settlements. Virtually the entire benefit increase is attributed to anticipated worker's compensation cost increases and PERA pension contributions. While the capital outlay portion of the budget represents less than 2% of the total, these expenditures did .decrease by nearly $21,000. To maintain our current level of services it was necessary to cut the ContingencyR~serve.bY $50,000 from $100,000 to $50,000. Originally it was estimated that new market valuation would provide approximately $110,000 of new property tax dollars for the 1999 operating budget. The general purpose tax levy requirement for the draft 1999 budget utilizes $99,973 of the above available amount. Overall, the proposed "preliminary" tax levy of $4,818,674 is comprised of the following elements: Pur!los~ 1. General levy (exc. HACA aid) 2. Net Transit levy (exc. HACA aid) 3. G.O. Debt Service 4. Revolving Equipment Fund levy 5. Existing Special Debt levies 6. Est. 1998 Capital Project levy Gross Property Tax Levy (Less est. Fiscal Disparity Aid) Net Residential Property Tax Impact Amount $2,701,870.00 $317,719.00 $886,085.00 $150,000.00 $673,000.00 $88.000.00 $4,816,674.00 -$425.000.00 $4,391,674.00 Also attached with your agenda report are two computer generated tax impact analysis' prepared by Juran & Moody. The first (PL 1999 Property Tax) illustrates the projected 1999 property taxes on homes ranging from $100,000 to $200,000 in market value if you were to exclude the $78,779 transit levy step-up increase. The second analysis (PL 1999 Property Tax II) shows the property tax impact when factoring in the entire levy. The moiected annual city monertv tax. excluding the transit levv increase. based unon the estimated 1999 collectable tax canacitv - - value. would be $877.38 on a $147.500 market value home. (averaQ:e market value home in Prior Lake as nrovided bv Scott County Assessor's Office), This represents a slight decrease from 1998 to 1999. When adding the step-up transit levy increase, the estimated property taxes for 1999 would be $893.48 or an increase of $15.68 per year. The actual property tax amounts will show a H:\BUDGETlPREAGRPT.DOC ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: slight variation from these estimates due to the compression effect of property tax class rates for 1999. f::.m:Jclus ion: Resolution 98-XX delineates the levy breakdown and establishes the City of Prior Lake's Truth in Taxation budget public hearing dates. The dates and times selected and reserved for the city are Monday December 7, 1998 at 7:00 p.m. and Monday December 14, 1998 at 7:00 p.m. in the event ofa Council continuation. By statute, the dates for both must fall between November 30 and December 21, 1998. Also, the initial hearing must not conflict with the County or the Metro taxing district which are indicated below: Taxing Autho,ritv ., Initial Hearing Date 12/02 12/08 11/30 12/07 12/03 Continuation Hearing Date 12/09 12/16 12/08 12/14 12/10 Special Metro ISD #719 ISD #720 Prior Lake Scott County In addition, a subsequent hearing (regular council meeting of 12/21) must be held to approve the final 1999 property tax levy. This day cannot be on the same day as the budget hearing. The following alternatives are available to the City Council: 1. Approve Resolution 98-XX as submitted. 2. Amend Resolution 98-XX to an amount determined by the City Council. Staff would recommend approval of Resolution 98-XX Certifying Proposed 1999 City of Prior Lake Property Tax Levy to Scott County Auditor. Once c~ed, the city is then restricted to dO'1:1.US nt, Onlr carmo! increase its fioallevy. 1. Budget S 2.1999 Bud ogram Emphasis. 3. PL 1999 Property Tax. 4. PL 1999 Property Tax II 5. Resolution 98-XX Certifying Proposed 1999 City of Prior Lake Tax Levy To Scott County Auditor , ,,4,' 'ii' 1\99BRPRES.DOC RESOLUTION 98-XX RESOLUTION CER.l.ll'flNG PROPOSED 1999 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY AUDITOR MOTION BY: SECOND BY: _ ._'L ". WHEREAS, Truth in taxation provisions as specified by property tax legislation requires a proposed property tax levy certification to the County Auditors' Office of Scott County; and WHEREAS, The City Council of the City of Prior Lake anticipates a 1999 General Fund Operating Budget increase of approximately 4% which would amount to $7,116,582.00, exclusive of enkllJl~Se fund expenditures, and subject to approval by the City Council following the course of public hearings scheduled for the month of December; and WHEREAS, The total proposed property tax levy approved has been determined to be $4,816,674.00; and WHEREAS, The proposed City of Prior Lake property tax levy for the year payable 1999 represents an increase of 4.99% inclusive of the transit service levy; and WHEREAS, The City shall conduct a public hearing at 7:00 P.M. Monday December 7, 1998 in the Prior Lake Council Chambers for the purpose of review and discussion of the City's proposed budget and a continuation hearing, if necessary, shall be scheduled for Monday December 14, 1998; and WHEREAS, The City Council will approve the 1999 General Operating Budget and the Final 1999 Property Tax Levy during a subsequent meeting on Monday December 21, 1998. NOWl.tl.EREFORE, BE IT RESOLVED BY 1.tl.E CITY COUNCIL OF PRIOR LAKE, that the proposed tax levy be distributed upon the taxable property in said City for the following purposes in payable 1999: Pur!los~ Amount * For General City Purposes Revolving Equipment Fund G.O. Improvement Bonds '92 (Downtown Overlay) G.O. Improvement Bonds '93 (Waterfront Passage) $3,171,549.00 $150,000.00 $116,000.00 $235,000.00 * * 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER H:\BUDGET\99BRPRES.DOC * G.O. Improvement Bonds '94 (Prior South) G.O. Improvement Bonds '95 (Ridgemont) G.O. Improvement Bonds '96 (Northwood) G.O. Improvement Bonds '97 (Pike Lake) G.O. Improvement Bonds '98 (Duluth) Capital Park Bonds of '73 & '77 Fire Hall Referendum Bonds '93 Park Referendum Bonds '97 $65,000.00 $100,000.00 $85,000.00 $72,000.00 $88,000.00 $36,640.00 $165,415.00 $532.070.00 * * * * ** *** *** Total... $4,816,674.00 Note: Single starred funds shall be spread over the entire consolidated City of Prior Lake. Note: Double starred funds shall be spread ov~r the.,consolidated City except for the former Savage portion subject to annexation. Note: Triple 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 8th day of September, 1998. YES NO Mader Kedrowski Petersen Schenck Wuellner Mader Kedrowski Petersen Schenck Wuellner {Seal} City Manager City of Prior Lake DETAILED DIFFERENCE BETWEEN ACTUAL 1998 AND 1999 GENERAL FUND BUDGETS Paae* DeDartment '98 Budaet '99 ProDosed ,% Chanae $ Chanae - p.411 41110 Mayor & Council $25,125 $23,910 -4.84% -$1,215 p.4/8 41130 Ordinance $15,000 $20,500 36.67% $5,500 p.5/9 41320 City Manager $254,369 $256,129 0.69% $1,760 p. 6/12 41330 Boards & Commissions $7,992 $10,038 25.60% $2,046 p. 6/13 41410 Elections $6,238 $3,371 -45.96% -$2,867 p. 7/14 41520 Director of Finance $90,281 $93,482 3.55% $3,201 p. 8/16 41530 Accounting $83,562 $85,468 2.28% $1 ,906 p. 9/18 41540 Internal Auditing $10,385 $10,685 2.89% $300 p. 9/19 41550 Assessing $37,425 $41,700 11.42% $4,275 p. 9/20 41610 Law $232,600 $231,000 -0.69% -$1,600 p. 10/21 41820 Personnel $70,547 $76,418 8.32% $5,871 p. 11/23 41910 Planning & Zoning $225,125 $280,321 24.52% $55,196 p. 13/26 41920 Data Processing $95,750 $138,543 44.69% $42,793 p. 14/29 41940 Buildings & Plant $192,895 $177,259 -8.11 % -$15,636 p. 15/32 41950 Central Garage $130,406 $134,408 3.07% $4,002 p. 17/35 42100 Police $1,675,326 $1,718,488 2.58% $43,162 p. 19/42 42200 Fire & Rescue $221,388 $225,077 1.67% $3,689 p. 21/46 42400 Building Inspection $334,234 $290,045 -13.22% -$44,189 p. 23/49 42500 Civil Defense $7,000 $7,1 00 1.43% $100 p. 23/50 42700 Animal Control $11,230 $11,230 0.00% $0 p. 24/51 43050 Engineering $441,739 $452,602 2.46% $10,863 p. 26/54 431 00 Street $346,531 $413,531 19.33% $67,000 p. 28/58 45100 Recreation $341 ,237 $355,516 4.18% $14,279 p. 30/61 45200 Parks $650,050 $674,583 3.77% $24,533 p. 32/65 45500 Libraries $12,855 $16,765 30.42% $3,910 p. 33/66 46500 Economic Dev. $54,842 $52,378 -4.49% -$2,464 p.34/68 47000 Debt Service $854,895 $886,085 3.65% $31 ,190 p. 35/69 49800 Transit Services $301,171 $379,950 26.16% $78,779 p. 35110 49999 Contingency $100.000 $50.000 -50.0004. -$50.000. General Fund $6,830,198 $7,116,582 4.19% $286,384 * 1 st page # is location on "Budget Comparative Year" document (Canary) * 2nd page # is location on "Budget Detail" document (Blue) BUDSUM,XLS Page 1 11 :27 AMBI2819B DETAILED DIFFERENCE BETWEEN ACTUAL 1998 AND 1999 ENTERPRISE FUND BUDGETS DeDartment '98 Budaet '99 ProDosed % Chanae .$ Chanae - - p. 36/71 49400 Water Utility $521,561 $522,010 0.09% $449 p.37/76 49450 Sewer Utility $1,003,929 $1,033,490 2.94% $29,561 p. 40/79 49420 Water Quality Utility $180.212 $172.452 -4.3104- -$7.76Q Enterprise Fund $1,705,702 $1,727,952 1.30% $22,250 BUDSUM.xLS Page 2 11 :27 AM8128198 BUDGET SUMMARY RECAP: '98 Budcet '99 ProDosed % 41000 GENERAL GOVERNMENT $1,477,700 $1,583,232 7.14% 42000 PUBLIC SAFETY $2,249,178 $2,251,940 0.12% 43000 PUBLIC WORKS $788,270 $866,133 9.88% 45000 CUL TURE-RECREA TION $1,004,142 $1,046,864 4.25% 46000 ECONOMIC DEVELOP. $54,842 $52,378 -4.49% 47000 DEBT SERVICE $854,895 $886,085 3.65% 49800 TRANSIT SERVICES $301,171 $379,950 26.16% 49999 CONTINGENT RESERVE $100.000 $50.000 -50.00%. General Fund $6,830,198 $7,116,582 4.19% BUDGET BREAKDOWN: '98 Budcet '99 ProDosed % of Total % Chance Personal Services $3,780,427 $3,945,363 55.44% 4.36% Current Expenses $1,672,055 $1,729,424 24.30% 3.43% Capital Outlay $121,650 $100,760 1.42% -17.17% Debt Service $854,895 $886,085 12.45% 3.65% Transit Services $301,171 $379,950 5.34% 26.16% Contingent Reserve $100.000 $75.000 .1.050& -25.00% Total $6,830,198 $7,116,582 100.00% 4.19% BUDSUM.xLS Page 3 11 :27 AM8128/98 1999 BUDGET PROGRAM EMPHASIS Major Budget Res1l11s..:. · Wage Package: inc. perform/steps $129,626 · Benefits: (1.4%) $10,554 · New Personnel: (0 FTE Addn.) ..1, , $-0- · Personnel: (Temp & O.T.) $24,756 · Operational Expense: (4.9%) $82,369 . Transit Services: (26.2%) $78,779 · Capital Outlay: (-17.2%) <$20,890> · Operating Debt: (3.7%) $31,190 · Contingency: (-50.0%) <$50,000> Total... $286,384 Total... Net ... 4.19% *1.78% * Less $78,779 (Transit pass through increase) Less $31,190 (Referendum debt step increase) Less $54,518 (Revenue offset expenditures i.e., Restitution fines & MIS reimb.) H:\BUDGETlBUOIDGH.DOC ..~~ PL 1 999 PROPERTY TAX Name of Issuer: CITY OF PRIOR LAKE, MINNESOTA Analysis: TAX IMPACT ANALYSIS r--fiLi-pi-~TAXAA-------------' L____________________________J EXCLUDES TRANSIT LEVY INCREASE RESIDENTIAL HOMESTEAD MARKET VALUE $100,000 $125,000 $147,500 $175,000 $200,000 DATE OF ANALYSIS: AUGUST 25, 1998 COLLECTABLE ESTIMATED 1999 TAX 1998 COLLECTABLE CAPACITY $1,213 COLLECTION TAX T AX CAPACITY TAX CAPACITY RATE YEAR LEVY VALUE VALUE INCREASE $1,213 1998 4,159,297 9,907,620 41.98% 509.22 1999 4,312,895 10,277,544 41.96% 508.97 INCREASE OR DECREASE OVER 1998 -0.02% ($0.25) NOTE: USED 1998 TAX RATE FOR 1999 CALCULATION NOTE: scon COUNTY TO PROVIDE EST. OF NEW TAX CAPACITY VALUE FOR 1999 1997-1998 NET TAX CAPACITY $1,675 $2,091 $2,600 $3,063 1998.1999 NET TAX CAPACITY $1,675 $2,091 $2,600 $3,063 703.17 702.83 I 1,285.85 1,285.23 877.80 877.38 1,091.48 1,090.96 ($0.62) PREPARED BY: ... JURAN & MOODY ~ STEVEN J. MATTSON V.P. QJiN'c 612-291-3034 ',.. PL 1999 PROPERTY TAX II Name of Issuer: CITY OF PRIOR LAKE, MINNESOTA Analysis: TAX IMPACT ANALYSIS DATE OF ANALYSIS: AUGUST 25,1998 COLLECTABLE ESTIMATED 1999 TAX 1998 COLLECTABLE CAPACITY COLLECTION TAX TAX CAPACITY TAX CAPACITY RATE YEAR LEVY VALUE VALUE INCREASE 1998 4,159,297 9,907,620 41.98% 1999 4,391,674 10,277,544 42.73% INCREASE OR DECREASE OVER 1998 0.75% r--flLi-pi-~TAX---------------' L____________________________J RESIDENTIAL HOMESTEAD MARKET VALUE $100,000 $125,000 $147,500 $175,000 $1,213 1997-1998 NET TAX CAPACITY $1,675 $2,091 $2,600 1998-1999 NET TAX CAPACITY $1,675 $2,091 $2,600 $1,213 509.22 518.31 $9.09 I I $15.68 : 1 C~EASE OVyE.R 98 . 179%1 I . I I I 1_______ NOTE: USED1998 TAX RATE FOR 1999 CALCULATION NOTE: SCOTr COUNTY TO PROVIDE EST. OF NEW TAX CAPACITY VALUE FOR 1999 PREPARED BY: ~ ~ JURAN & MOODY lJ1j STEVEN J. MATTSON V.P. QJiN'c 612-291-3034 ;- ; $200,000 $3,063 $3,063 1,285.85 1,308.82 $22.97