HomeMy WebLinkAbout01(A) - Long Range Financial Plan Update Report
ITEM: 1A
CITY COUNCIL AGENDA REPORT
MEETING DATE: June 09, 2026
PREPARED BY: Nicole Klekner, Finance Director
PRESENTED BY: Nicole Klekner
AGENDA ITEM: Financial Planning Update
RECOMMENDED ACTION:
The purpose of this workshop item is to provide an update on projection assumptions for 2027
budgeting purposes.
Staff is looking for Council feedback and direction on the following items:
Council direction on moving forward with planning assumptions for 2027 budgeting and
long-range planning.
BACKGROUND:
A financial planning study was completed in 2023. The study objectives were as follows:
Revenue Sufficiency: Determine the level of revenue needed to fund planned general
government operations and services, capital improvements, and debt service while maintaining
adequate reserves for future services and capital needs of the City.
Levy and Rate Calculations: Model projected future annual City tax levy and tax rate changes,
and utility rate changes, need to provide revenue sufficiency
The study financial planning paramaters were as follows:
Parameters:.
• Achieve average annual change in city tax rate of 3%
• City will issue debt and structure amortization of debt to achieve the parameters for
average annual change in city tax rate as listed above. This will spread the financial impact
of capital improvements over multiple years and future taxpayers.
Annually, staff updates the 10-year financial plan for any change in city service needs and funding.
The financial plan includes funding needs for the city to maintain service levels, address the needs
of a growing city, and provide budget stability by minimizing annual variation in the city tax rate,
as defined in the financial planning study mentioned above. The primary city service priorities to
be funded include personnel, equipment replacement, park and facilities replacement, and
pavement management.
Further information is included in the financial plan PowerPoint Presentation.
ATTACHMENTS:
1. Financial Planning PowerPoint Presentation
City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372
Financial Planning Update Financial Plan including proposed 2027 budget–Part 4: July 28, 2026 Capital Improvement Plan–Part 3: June 23, 2026 Year Financial Plan Parameters-10–Part 2:
June 9, 2026 Personnel Plan–Part 1: May 12, 2026 June 9, 2026
Agenda 2 Continue 2027 budget processNext Steps:Council Direction on Planning AssumptionsFuture ChallengesProjection AssumptionsYear Objectives-Ten
PriorLakeMN.gov Develop strategy to increase bond rating 3.Establish Financial Plan that reflects infrastructure needs 2.Develop infrastructure funding scenarios 1.Three initiatives
to help the city maintain financial stability:High Quality Parks & TrailsStable & Sustainable InfrastructureFinancial SustainabilityStrategic Priorities:3 Strategic Plan Initiatives
PriorLakeMN.gov Objectives: Revenue Sufficiency and Levy/Rate Calculations Year Planning Period-Objectives for Ten 4%6.2RateTaxCityInChangeAnnualAverageYear-10•%2.6LevyTaxInChangeAnnualAverageYear-10
•range plan:-Year long-Current Ten.taxpayersfutureandyearsmultipleoverimprovementscapitalofimpactfinancialthespreadwillThis.abovelistedasratetaxcityinchangeannualaverageforparameterstheachievetodebto
famortizationstructureanddebtissuewillCity•%3ofratetaxcityinchangeannualaverageAchieve•Parameters:
PriorLakeMN.gov Estimated tax capacity has increased 4.6% to $68.5M•Estimated taxable market value has increased 4.1% to $6.2B•Growth in tax capacity and market value assumptions for
pay 2027:Family Medical Leave for 2027.increase by approximately 3.0% annually. May need to budget for potential increase in Paid City will implement its personnel plans for new staff
(FTEs). Salary and wages are assumed to New commercial square footage annual average of 50,000 •Apartment units annual average of 50 units •2029. Ramps up to 125/year by 2033.-Building
permits of 107/year for 2027•City provided assumptions for future housing units and commercial/industrial growth:approximately 4% per year.2036 of -Financial plan assumes an average
annual growth in tax capacity for 20275 Projection Assumptions
PriorLakeMN.gov Facilities Maintenance Worker•time position-time Communication Specialist to full-Convert part•time position-time Records Specialist to full-Convert part•Two Police Officers
•Six Firefighters (dependent on SAFER grant)•time)-Communication Specialist (part•2031:-2028Two Police Officers•Administrative Assistant•2027:Records Specialist•Sergeant •Network Administrator•2026:
Staffing Changes per Personnel Plan6 Projection Assumptions
PriorLakeMN.gov LeviesTaxServiceDebt•LeviesTaxCIP•(CIP)plansterm-longtoCommitmentsimpactsinflationandconditionsmarketforAdjustments–Healthcare/Contracts/Commodities7 Projection Assumptions
PriorLakeMN.gov projectsstreetforassesstoabilitylimitedforExposure2032inexpansionCenterMaintenanceincludingimprovements,facilityfutureforFundingplanfundingParksplanmanagementpavementforFunding:Fu
ndingProjectCapitalimpactsinflationandconditionsMarket–commoditiesandWages/HealthcaredevelopmentofratetheinReductionmandatesUnfundedservicescitymaintaintostaffadditionalforFunding:FundGeneral
8 Future Challenges
PriorLakeMN.gov Next Steps Year city financial plan-Program which follows 10Year Capital Improvement -Adopt 10-August 2026 budget financial plan to Council with preliminary 2027 Year
-Council Work Session: Present 10–July 2026 Improvement PlanCapital –Council Work Session –June 2026 AssumptionsCity Finance Plan –Council Work Session –June 2026 Personnel Plan–May
2026 9 PlanFinancial Year City -Ten
PriorLakeMN.gov range planning.-2027 budgeting and longCouncil direction on moving forward with planning assumptions for 10 Council Discussion