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III.1. Finance Update; Bishop CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: July 21, 2020 Subject: Finance Update _____________________________________________________________________ On June 25th, Governor Walz announced that local governments will receive $841 million in Coronavirus Aid, Relief, and Economic Security Act (CARES) funds previously received by the state. The funds will be distributed to Cities based on an allocation formula of $75.34 per capita. Hopkins has received $1,485,183 under this formula. A full presentation will be given at the city council meeting. It will incl ude an overview of the CARES Act, the guiding principles on eligible expenditures and a plan for how Hopkins could use the funds. Finance Finance Update July 21, 2020 CARES Act Overview Coronavirus Aid, Relief, and Economic Security Act (CARES) Passed on March 27th $2 trillion of federal funding for public health and economic impacts of COVID-19 CARES Act Overview Coronavirus Relief Fund (CRF) provides $150 billion to State, Local and Tribal governments States and local governments with population over 500,000 received direct assistance CARES Act Overview On June 25th, Governor Walz announced distribution of $841 million of State’s share of distribution to local governments Cities will receive $75.34 per capita Hopkins allocation is $1,485,183 CARES Act Overview Guidance on eligible expenditures is provided by U.S. Department of Treasury Broad range of uses are permissible Each government will need to determine what expenditures are eligible CRF –Guiding Principles 1.Are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19) Direct response and second order effects, such as providing economic support to those suffering from employment of business interruptions Reasonable judgment of government officials CRF –Guiding Principles 2.Were not accounted for in the budget most recently approved as of March 27, 2020 Cannot be lawfully funded using a line item, allotment or allocation with budget For a substantially different use from any expected use of funds in such line item CRF –Guiding Principles 3.Were incurred during the period that begins on March 1, 2020, and ends on November 15, 2020 Performance or delivery must occur during the covered period, but payment does not Goods or services received after covered period could be eligible if there is delay beyond recipient’s control, such as supply chain disruptions or increased demand CRF –Guiding Principles Replacement of lost revenues, including property tax relief are ineligible expenditures Unexpended funds will be transferred to Hennepin County Medical Center Funds are subject to Single Audit Act Hopkins Plan Economic Support to the Community - $250,000 Rental Assistance Program Administered ICA Food Shelf Business Assistance Grant Program Targeted Business Assistance Theater or Performing Arts focus Hopkins Plan Technology Improvements -$500,000 Facilitate additional employees working from home Automate internal and external processes Upgrade conferences rooms and facilities for virtual meetings Hopkins Plan City Operations Payroll Costs -$650,000 For employees with duties that have substantially changed as a result of COVID-19 Unemployment Costs -$50,000 ? Paid leave -$45,000 Paid sick leave or expanded family medical leave Hopkins Plan Operational Expenditures FEMA matching requirements -$25,000 Liquor License Refunds -$18,000 Estimated expenditures of $1.54 Million Allocation of $1.49 Million Hopkins Plan Other potential expenditures Expanded Worker’s Compensation Costs Election Coordination Public Safety Payroll Costs Hopkins Plan Payroll costs were included in 2020 Budget, but for substantially different purposes Will make other revenue available for unrestricted uses which could include Costs outside covered period Reduce the deficit 2021 Draft Budget & Tax Levy July 21, 2020 2021 General Fund Budget Reviewed Financial Management Plan at January 10, 2020 Goal Setting Retreat Budget Engagement Session held on January 21, 2020 Budget Survey conducted in March/April 2021 General Fund Budget Will be affected by COVID-19 in some way Budget being presented keeps the same levels of service as in 2020 2021 General Fund Budget Balanced Budget Revenues = Expenditures $16,003,837 4.18% Increase from 2020 2021 General Fund Expenditures Additional Request $150,000 –COVID-19 Contingency Budgeted in the General Fund Could be transferred to any other fund 2021 General Fund Expenditures Budget Draft % Increase FY2020 FY2021 (Decrease) General Government 1,932,032 1,993,479 3.18% Community Services 1,653,186 1,655,784 0.16% Public Safety 7,461,159 7,814,739 4.74% Public Works 3,443,017 3,550,061 3.11% Recreation 783,122 750,574 -4.16% Other 89,200 239,200 168.16% 15,361,716 16,003,837 4.18% 2021 General Fund Expenditures 2021 General Fund Revenue Tax Levy –increased $701K or 5.6% Collections budgeted at 100%, same as in prior years No budgeted increase to Local Government Aid Other revenue categories budgeted conservatively 2021 General Fund Revenue Budget Proposed % Increase FY2019 FY2020 (Decrease) Property Taxes 12,564,305 13,265,276 5.58% Intergov't Revenue 1,352,946 1,355,946 0.22% Licenses, Permits & Fines 777,865 786,815 1.15% Charges for Service 251,050 228,550 -8.96% Misc. Revenue 415,550 367,250 -11.62% Total Revenue 15,361,716 16,003,837 4.18% 2021 General Fund Revenue DRAFT 2021 Tax Levy Actual DRAFT % Increase Purpose FY2020 FY2021 (Decrease) General Operations General Fund 12,479,305 13,180,276 5.62% Capital Levy 75,000 175,000 133.33% Arts Center 325,225 331,182 1.83% Pavilion Fund 290,000 340,000 17.24% Equipment Replacement 110,000 250,000 127.27% Total General Operations 13,279,530 14,276,458 7.51% Debt Levy 4,250,154 4,267,950 0.42% Total Levy 17,529,684 18,544,408 5.79% City Taxes on Median Value Home 2020 Actual Estimated Market Value as of 1/2/19 = $276,000 City Taxes -$1,827 Increase of $92 or 5.31% 2021 DRAFT Estimated Market Value as of 1/2/20 = $291,000 City Taxes -$1,929* Increase of $102 or 5.59% *estimated based on preliminary tax capacity information Next Steps Virtual Budget Engagement meeting on August 17 from 6-7:30 Details will be posted at: https://www.hopkinsmn.com/466/City-Budget- Process Next Steps 1st Review of ERP & CIP on August 18 1st Review of Depot, Arts Center & Pavilion Budgets on August 18 Adopt Preliminary Budget and Tax Levy on September 15