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Home My WebLink About10A - 2008 City Budgets and Preliminary 2008 City Tax Levy MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT SEPTEMBER 4, 2007 10A Ralph Teschner, Finance Director CONSIDER APPROVAL OF A RESOLUTION ADOPTING PROPOSED 2008 CITY BUDGETS AND CERTIFYING PRELIMINARY 2008 CITY OF PRIOR LAKE PROPERTY TAX LEVY TO SCOTT COUNTY DEPARTMENT OF TAXATION Introduction Truth in Taxation statutes require that each "taxing authority" adopt a proposed budget and certify a preliminary tax levy for payable 2008 property taxes to the Scott County Department of Taxation on or before September 15, 2007. 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 2008 budget workshOp on May 7, 2007. The discussion that took place was fairly general. The objectives of the proposed 2008 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 2008. At the conclusion of the first budget study session, Council direction was for Staff to prepare an operating budget for 2008 that would accomplish these primary objectives while minimizing the property tax impact. On August 6,2007 a preliminary budget presentation was made to the City Council. Following this meeting the Council conducted its initial review of the proposed 2008 budget requests, including the general, water and sewer and transit enterprise fund budgets, at its second workshop on August 20,2007. An explanation of the proposed property tax levy was reviewed along with an explanation of new proposed budget expenditures. Current Circumstances The following budget deletions/reductions/adjustments were made by the City Council: 1. Council Blackberry service elimination (-$2,800) 2. Community survey deletion ($-25,OOO) 3. Wave Length publication reduction (-$7,OOO) 4. Planning/Engineering professional services reduction (-$10,000) 5. Fiber optic plan reduction (-$50,OOO) 6. Fire truck equipment reduction (-$20,OOO) 7. Building superintendent % year funding (-$41 ,500) 8. Building inspection overtime (-$2,500) 9. Senior program modification (-$12,OOO) www.cityofpriorlake.com HIS U DGET\08 pl"ei i m budrpt. dc.r Phone 952.447.9800 / Fax 952.447.4245 10. McComb market study (-$15,OOO) 11. Economic development land options (-$25,OOO) 12. Contingency increase (+$25,000) 13. Revenue enhancement (+$15,OOO) The cumulative effect of these changes amounted to an initial propertv tax reduction of $200.800. The Council acknowledged the remaining 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. As a result of this direction the proposed 2008 budget and the property tax levy it requires have the following characteristics: · The property tax impact on a $315,000 market value home is estimated to be 3.95% or $37 per year. . The total property tax levy (not taxes) proposed for all funds represent an increase of 7.42%. . The budgets as proposed provide for a continuation of services at existing levels and for improvements in certain areas. · Addition of one new (FTE) personnel position - building superintendent. . Addition of two new (PIT) personnel positions - senior/community coordinator & utility billing clerk . The proposed 2008 budgets continue the focus of the Prior Lake 2030 Vision and Strategic Plan. Outlined below are the major items that represent nearly 94% of the operational increase within the proposed 2008 General Fund Budget. New or increased 2008 oDeratlonal eXDenses*: 1. Labor contracUPERA mandate 2. Building/senior personnel additions 3. Legal (general/prosecution) 4. Property/liability. insurance 5. New building utilities increase 6. Fuel increase 8. Fiber technology plan 9. Debt service 10. Contingency Total... * rounded Truth-in-Taxation HearinG Process: $311,000.00 $75,000.00 $78,000.00 $36,000.00 $93,000.00 $26,000.00 $25,000.00 $29,000.00 $25,000.00 $698,000.00 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). Because our proposed property tax levy increase for 2008 is higher we are required to conduct a TNT hearing which is scheduled for Monday, December 3,2007. ISSUES: The attached resolution incorporates a proposed 2008 General Fund Operating Budget of $12,426,431 representing a 6.34% increase above the H :\BU DGET\08prel im bud ; pI. doc current year. A "Budget Summary" showing the increases/decreases of each respective department is attached. Overall, the proposed "preliminary" tax levy of $9,365,437 is comprised of the following elements: Pur 0 e Amount $6,554,743.00 $1,000,311.00 $576,170.00 $300 000.00 $934,213.00 $9,365,437.00 The initial property tax levy certification for 2008 as approved this evening may only be adjusted downward when the final budget and property tax levy is considered in December. 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 2008. 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 2007 adjusted by an average market value rise of 5% for payable 2008 property taxes. As shown on the "Properly Tax Impact Analysis" the projected annual city property tax based upon the estimated 2008 tax capacity value, would be $981.49 on a $315,000 market value home in Prior Lake. This represents an estimated 3.95% increase or $37.31 for the year in city property taxes from 2007 to 2008. 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. Resolution 07 -xxx identifies the various city budgets and delineates the preliminary 2008 property tax levy breakdown. The City will hold a formal Truth in Taxation public hearing this year on Monday December 3, 2007 at 6:00 p.m. to receive public comment. Final budget adoption and property tax levy approval will occur the following week on December 17, 2007. ALTERNATIVES: The following alternatives are available to the City Council: 1. Approve Resolution Adopting Proposed 2008 City Budgets and Certifying Preliminary 2008 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 H :\81 j OGET\08 prel i mbudrpt doc in late December. Revro Frank BOYleYi ATTACHMt9"/ 1. Resolution Adopting Proposed 20087 City Budgets and Certifying Preliminary 2008 City of Prior Lake Property Tax Levy to Scott County Department of Taxation 2. Budget Summary 3. Property Tax Impact Analysis H :\BU DGET\Ci8prelimbudrpt doc A RESOLUTION ADOPTING PROPOSED 2008 CITY BUDGETS AND CERTIFYING PRELIMINARY 2008 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; and WHEREAS, The City Council of the City of Prior Lake anticipates a 2008 General Fund Operating Budget increase of approximately 6.34%, which would amount to $12,426,431, and subject to approval by the City Council at its budget adoption proceeding scheduled for December17,2007;and WHEREAS, The City of Prior Lake's proposed 2008 Enterprise Fund budgets (Water & Sewer, Water Quality) total an aggregate $4,411,188 excluding transfers; and WHEREAS, The City of Prior Lake's proposed 2008 Transit Service Fund budget totals $575,651; and WHEREAS, The total proposed property tax levy approved has been determined to be $9,365,437; and WHEREAS, The City of Prior Lake hereby certifies that the levy certification rate will increase for payable 2008 property taxes; and WHEREAS, The proposed City of Prior Lake property tax levy for the year payable 2008 represents an increase of 7.42%; and WHEREAS, The City Council will consider the 2008 General Operating Budget, Enterprise Fund Budgets and the Final 2008 Property Tax Levy during its regularly scheduled council meeting at 6:00 p.m. on Monday December 3, 2007 at 4646 Dakota Street SE, Prior Lake with a continuation (if necessary) at 6:00 p.m. on December 10, 2007. 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 2008: Puroose Amount * For General City Purposes Revolving Equipment Fund $6,554,743.00 $300,000.00 * H: \BU DGET\D8prelim bud res, doc www.cityofpriorlake.com Phone 952.447.9800 / Fax 952.447.4245 * G.O. Improvement Bonds '98 (Duluth) $60,000.00 * G.O. Improvement Bonds '99 (Candy Cove) $53,000.00 * G.O. Improvement Bonds '00 (Oak Ridge) $77,000.00 * G.O. Improvement Bonds '01 (Frog Town) $62,000.00 * G.O. Improvement Bonds '02 (Pixie Point) $63,000.00 * G.O. Improvement Bonds '03 (150th Street) $120,000.00 * G.O. Improvement Bonds '04 (Breezy Point) $183,000.00 * CSAH 82 Improvement Appropriation '06 $136,663.00 * G.O. Street Reconstruction Bonds '07 $179,550.00 * G.O. Building Bonds '05 (EDA) $576,170.00 ** Fire Station #1 Referendum Bonds '93 $165,400.00 ** Park Referendum Bonds '97 $624,581.00 ** Fire Station #2 Referendum Bonds '06 $210.330.00 Total... $9,365,437.00 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 4th day of September, 2007. YES NO Haugen Erickson Hedberg LeMair Millar Haugen Erickson Hedberg LeMair Millar {Seal} City Manager City of Prior Lake H:\BUDGEn08prelimbudres.doc "EXECUTIVE BUDGET SUMMARY" DETAILED DIFFERENCE BETWEEN ACTUAL 2007 AND PROPOSED 2008 GENERAL FUND BUDGET DeDartment '07 Bude:et '08 Prooosed % Chane:e $ Chane:e 41110 Mayor & Council $61,927 $69,931 12.92% $8,004 41130 Ordinance $12,000 $12,000 0.00% $0 41320 City Manager $384,438 $365,418 -4.95% -$19,020 41330 Boards & Commissions $13,337 $13,337 0.00% $0 41410 Elections $5,565 $16,297 192.85% $10,732 41520 Director of Finance $126,848 $130,865 3.17% $4,017 41530 Accounting $168,240 $174,226 3.56% $5,986 41540 Internal Auditing $18,200 $22,200 21.98% $4,000 41550 Assessing $102,200 $110,800 8.41% $8,600 41610 Law $298,000 $376,000 26.17% $78,000 41820 Personnel $75,799 $78,343 3.36% $2,544 41830 Communications $131,974 $126,798 -3.92% -$5,176 41910 Planning & Zoning $350,713 $434,716 23.95% $84,003 41920 Data Processing $142,550 $175,595 23.18% $33,045 41940 Buildings & Plant $329,737 $410,056 24.36% $80,319 42100 Police $2,802,295 $2,992,990 6.80% $190,695 42200 Fire & Rescue $668,649 $766,153 14.58% $97,504 42400 Building Inspection $526,660 $436,443 -17.13% -$90,217 42500 Emergency Management $27,300 $7,500 -72.53% -$19,800 42700 Animal Control $33,228 $34,890 5.00% $1,662 43050 Engineering $542,430 $560,159 3.27% $17,729 43100 Street $883,527 $949,651 7.48% $66,124 43400 Central Garage $283,243 $296,313 4.61% $13,070 45100 Recreation $391,115 $478,473 22.34% $87,358 45200 Parks $1,243,522 $1,302,992 4.78% $59,470 45500 Libraries $97,485 $100,932 3.54% $3,447 46500 Economic Development $167,141 $131,872 -21.10% -$35,269 47000 Debt Service $1,547,684 $1,576,481 1.86% $28,797 49999 Contingency Reserve $250,000 $275,000 10.00% $25,000 General Fund $11,685,807 $12,426,431 6.34% $740,624 Estimated property tax increase 3.95% BUDSUM.xLS Page 1 8/2712007 BUDGET SUMMARY RECAP: '07 Budeet '08 Prooosed % 41000 GENERAL GOVERNME $2,221,528 $2,516,582 13.28% 42000 PUBLIC SAFETY $4,058,132 $4,237,976 4.43% 43000 PUBLIC WORKS $1,709,200 $1,806,123 5.67% 45000 CULTURE-RECREATIO $1,732,122 $1,882,397 8.68% 46000 ECONOMIC DEVELOP. $167,141 $131,872 -21.10% 47000 DEBT SERVICE $1,547,684 $1,576,481 1.86% 49999 CONTINGENCY RESER $250.000 $275.000 10.00% General Fund $11,685,807 $12,426,431 6.34% BUDGET BREAKDOWN: '07 Budeet '08 Prooosed % of Total % Chanee Personal Services $6,524,318 $6,910,450 55.61% 5.92% Current Expenses $3,136,136 $3,429,410 27.60% 9.35% Capital Outlay $227,669 $235,090 1.89% 3.26% Debt Service $1,547,684 $1,576,481 12.69% 1.86% Contingency Reserve $250.000 $275.000 2.21% 10.00% Total $11,685,807 $12,426,431 100.00% 6.34% DETAILED DIFFERENCE BETWEEN ACTUAL 2007 AND PROPOSED 2008 ENTERPRISE FUND BUDGETS Deoartment '07 Budeet '08 Prooosed % Chane:e $ Chane:e 49300 Fund Transfwers $506,987 $1,003,414 97.92% $496,427 49400 Water Utility $1,107,693 $1,768,821 59.69% $661,128 49450 Sewer Utility $2,571,031 $2,327,006 -9.49% -$244,025 49420 Water Quality Utility $330,454 $315,537 -4.51 % -$14,917 49804 Transit Services $581.579 $575.651 -1.02% -$5.928 Enterprise Funds $5,097,744 $5,990,429 17.51% $892,685 BUDSUM,XLS Page 2 8/2712007 ESTIMATED 2008 PROPERTY TAX IMPACT ANALYSIS... (08/I/07) ACTUAL Collection Property Taxable Referendum 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 2007 $7,103,809 $2,456,346,500 $2,430,109,700 $24,976,051 28.4425% 0.0404% Value $2,000 $2,500 $3,000 $3,500 $4,000 (referendum levy) $981,949 $8 085 758 general tax $568.85 $711.06 $853.27 $995.49 $1,137.70 (fiscal disparities) ($633,019) m.v. tax $80.82 $101.02 $121.22 $141.43 $161.63 Gross Levy $8,718,777 m.v. credit -$56.95 -$43.63 -$30.31 -$16.99 -$3.67 total... $592.71 $768.45 $944.19 $1,119.92 $1,295.66 PROPOSED Collection Year Property Tax Levy Est. Taxable Market Value 2008 (referendum levy) $7,731,288 $1,000,311 $8731599 ($633,838) $9,365,437 $2,696,001,100 ( fiscal disparities) Gross Levy FOOTNOTES: Scott County TNT Values @ 08/I/07: $2,696,001,100 2008 est. taxable market value $27,412,636 2008 est. tax capacity value $633,838 2008 est. fiscal disparities aid Est. Referendum Est. Tax Tax Capacity Market Value Market Value Capacity Value Rate Rate Residential Market Value Home · $210,000 $262,500 $315,000 $367,500 $420,000 $2,666,760,325 $27,412,636 28.2034% 0.0375% Tax Capacity Value $2,100 $2,625 $3,150 $3,675 $4,200 general tax $592.27 $740.34 $888.41 $1,036.47 $1,184.54 m.v. tax $78.77 $98.46 $118.16 $137.85 $157.54 m.v. credit -$51. 72 -$38.39 -$25.07 -$11.75 SQ.OO total... $619.32 $800.41 $981.49 $1,162.58 $1,342.09 $ Property Tax Increase $26.61 $31.96 $37.31 $42.66 $46.43 % Property Tax Increase 4.49"10 4.16% 3.95% 3.81% 3.58% Pavable 2008 Median Value Residential Home $254,800 ave. EMV taxable market inflation - 4.44% inc. .. city portion 01$304 market value credit = est. .2820% (market value credit reduced by .09% for each $100 of value exceeding $76,000) . Levy Components: $6,554,743 Budget levy $1,000,311 Referendum debt levy $934,213 CIP debtlevy $576,170 Building debt levy $300 000 Revolving Equipment Fund levy $9,365,437 Budget Comparison: $12,426,431 Proposed 2008 Budget $11 685 807 Actual 2007 Budget $740,624 6.34% increase """"'1_ Pavable 2008 Averaqe Value Residential Home $323,500 -' 11:r11 AM8fZT1'lfD1