VII.3. Review of 2021 Preliminary Budget and Tax Levy and Preliminary HRA Levy; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: September 1, 2020
Subject: Review 2021 Preliminary Budget and Tax Levy
_____________________________________________________________________
PURPOSE
No formal action is required at this meeting. Staff is requesting input on the revisions
being made to the draft budget and tax levy presented on July 21, 2020.
INFORMATION
Summary: A draft version of the 2021 Budget and Tax Levy was prepared by staff and
presented to City Council on July 21st. The draft included both conservative revenue
estimates and decreased expenditures. Charges for services and miscellaneous
revenue have decreased from the 2020 Budget by $22,800 and $48,300, respectively.
The City also hosted a virtual budget engagement session on August 17th that reviewed
the same draft version of the budget and tax levy. City Council has directed staff to
make reductions before the preliminary levy is set in September.
The general fund budget and tax levy will still meet the needs of the community, but
does offer a lower level of services than in 2020. The General Fund budget is balanced.
Revenues and expenditures are both set at $15,750,835, a $389,122 or 2.53%
increase from 2020. The 2021 tax levy has also been revised based on the direction of
City Council. The total tax levy is $18,023,384, a $493,700 or 2.82% increase from
2020. Based on preliminary tax capacity information, city taxes on a median value
home ($291,000) will be $1,867, a $40 or 2.19% increase from 2020.
Details regarding the budget and reductions being proposed are provided in the
remainder of the memo.
Finance Department
Local Government Aid (LGA) amounts were certified and published the last week in
July. We have incorporated the certified amount of $853,671 in this budget. This is an
increase of $118,725 over the draft budget previously presented and results in a
reduction to the tax levy of the same amount. Although the 2021 amounts have been
certified there is still some uncertainty surrounding the State’s budget. Projections
released on July 31st project a $4.7 billion deficit during the State’s next two-year
budget period. The 2021 LGA payments are scheduled for July 2021 and December
2021 could still be impacted by the actions of the Legislature or Governor. In the past,
there have been reductions to LGA that have had a substantial impact on our
organization.
General Fund Reductions of $100,000 have been identified and removed from the
budget. An open public works superintendent position was eliminated and the
supervisory aspects combined with an existing position. Other reductions identified
include reducing crack sealing on City streets by 25%, a 20% reduction in tree re-
planting and delaying all pole painting.
COVID-19 Contingency of $150,000 has been removed from the budget. This
contingency budget was included to address the financial uncertainty surrounding
COVID-19 in 2021. It could have been transferred to any of the City’s funds
experiencing financial difficulty. Staff believes funds from the Equipment Replacement
Fund and Capital Improvement Fund could be used as one-time contingency for 2021.
Any additional impacts from COVID-19 could cause the city to need to rely on existing
reserves or further reductions.
Burnes Park debt service has previously been paid for with a portion of our debt levy.
$150,000 of franchise fees that were previously dedicated to current park
improvements will be used to pay debt service for the 2017 project. The tax levy was
planned through 2032 and this decision could be one-time or continued. The five-year
plan for the Park Dedication Fund would need updating based on this change. The fund
would rely on park dedication fees from new development to fund current projects. This
will likely leads to cancelled or delayed projects at Shady Oak Beach, Cottageville Park,
Maetzold Field, Oakes Park and Downtown Park.
FUTURE ACTION
A preliminary levy must be adopted by September 30th of each year. The preliminary
levy is planned to be approved at the September 15th City Council Meeting. The
preliminary levy will be the maximum allowable amount for 2021 and can only be
reduced.
A final levy must be adopted by December 31st of each year at or below the preliminary
levy amount. A Truth and Taxation hearing is planned for Monday, November 30th.
The final levy can be approved on December 1st or 15th.
City of Hopkins
DRAFT General Fund Revenue Budget
For the Year Ending December 31, 2021
September 1, 2020
Department 2020 Budget
DRAFT
2021 Budget
% Increase
(Decrease)
Property Taxes 12,564,305 12,893,552 2.62%
Intergovernmental Revenue
Local Government Aid 734,946 853,671
Intergovernmental Revenue - Other 618,000 621,000
Total Intergovernmental Revenue 1,352,946 1,474,671 9.00%
Licenses, Permits & Fines
Court Fines & Penalties 177,750 176,000
Building Permits & Inspections 461,300 479,300
Inspection Fines & Citations 8,000 6,000
City Clerk - Business Licenses 7,000 7,000
PD - Liquor, Animal Licenses & Penalties 102,300 97,800
Fire - Licenses & Permits 1,100 300
Public Works - Licenses & Permits 19,415 19,415
Planning & Zoning - Licenses & Permits 1,000 1,000
Total Licenses, Permits & Fines 777,865 786,815 1.15%
Charges for Service
Finance Department 5,500 5,500
Assessing 3,000 3,000
Inspections 105,900 103,900
Police 35,000 35,000
Fire 10,500 10,500
Public Works 4,150 3,150
Activity Center 87,000 67,500
Total Charges for Service 251,050 228,550 -8.96%
Miscellaneous Revenue
Franchise Fees 296,200 296,200
Miscellaneous 15,250 15,250
Finance Department 1,200 2,000
Police 2,000 500
Fire 3,500 3,500
Public Works 5,300 5,300
Activity Center 32,100 14,500
Community Development 60,000 30,000
Total Miscellaneous 415,550 367,250 -11.62%
Total Revenues 15,361,716 15,750,838 2.53%
City of Hopkins
DRAFT General Fund Revenue Budget
For the Year Ending December 31, 2021
September 1, 2020
Department 2020 Budget
DRAFT
2021 Budget
% Increase
(Decrease)
City Council 97,630 102,095 4.57%
Administrative Services 854,893 866,311 1.34%
Finance 400,495 426,278 6.44%
Legal 175,000 200,000 14.29%
Municipal Building 404,014 390,560 -3.33%
Assessing 221,835 245,920 10.86%
City Clerk 237,513 176,656 -25.62%
Inspections 863,296 879,588 1.89%
Police 5,977,982 6,242,453 4.42%
Fire 1,483,177 1,566,528 5.62%
Public Works 3,443,017 3,469,191 0.76%
Recreation 285,279 291,339 2.12%
Activity Center 497,843 456,798 -8.24%
Planning & Zoning 222,382 233,000 4.77%
Community Development 108,160 114,921 6.25%
Tuition Reimbursement 19,200 19,200 0.00%
Contingency 50,000 50,000 0.00%
Transfer to Other Funds 20,000 20,000 0.00%
Total Expenditures 15,361,716 15,750,838 2.53%
City of Hopkins
DRAFT General Fund Revenue Budget
For the Year Ending December 31, 2021
September 1, 2020
ACTUAL DRAFT % Increase
Purpose FY2020 FY2021 (Decrease)
General Operations
General Fund 12,479,305 12,808,552 2.64%
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 13,904,734 4.71%
Debt Levy 4,250,154 4,118,650 -3.09%
Total Levy 17,529,684 18,023,384 2.82%
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: September 1, 2020
Subject: Review 2021 Preliminary Housing & Redevelopment Authority (HRA) Levy
_____________________________________________________________________
PURPOSE
No formal action is required at this meeting. Staff is requesting input on the preliminary
HRA Levy for 2021.
INFORMATION
The HRA Levy is the main revenue source for the City’s Economic Development Fund
and plays an important role in the City’s continued efforts for redevelopment. The Fund
does have recurring costs. The HRA levy is a separate levy and appears on tax
statements under Other Taxing Districts.
There are levy limits for the HRA Levy based on 0.01850% of the City’s estimated
market value. The market value used for the 2021 Levy is $2,203,931,800, resulting in
a maximum HRA Levy of $407,727. Setting the levy at $407,727 would be an increase
of $39,776 or 10.81% from 2020. The City’s market value over this time period
increased by $215,006,800 or 10.81%. The HRA Levy has been set at the maximum
allowed over the past five years:
Tax Year HRA Levy $ Increase % Increase
2016 296,813.00 24,241.00 8.89%
2017 310,200.00 13,387.00 4.51%
2018 331,337.00 21,137.00 6.81%
2019 350,154.00 18,817.00 5.68%
2020 367,951.00 17,797.00 5.08%
Finance Department
Recommended Options to Consider:
Option 1: Approve the maximum allowable levy of $407,727, which is a $39,776 or
10.81% increase from 2020. This is consistent with prior years and will allow the most
flexibility in the Economic Development Fund. This is a preliminary levy and can be
reduced.
Option 2: Approve a levy with a modest inflationary increase of 2.75%. This would
result in a total levy amount of $378,070, which is a $10,119 increase from 2020. This
still allows some flexibility in the Economic Development Fund. It is also preliminary
and can be reduced.
FUTURE ACTION
A preliminary levy must be adopted by September 30th of each year. The preliminary
levy is planned to be approved at the September 15th City Council Meeting. The
preliminary levy will be the maximum allowable amount for 2021 and can only be
reduced.
A final levy must be adopted by December 31st of each year at or below the preliminary
levy amount. A Truth and Taxation hearing is planned for Monday, November 30th.
The final levy can be approved on December 1st or 15th.
Review 2021 Preliminary Budget
& Tax Levy
September 1, 2020
2021 Budget & Tax Levy
Reviewed Financial Management Plan at
January 10, 2020 Goal Setting
Budget Engagement Session held on January
21, 2020
Budget Survey conducted in March/April
2021 Budget & Tax Levy
Draft Budget & Tax Levy Presented to City
Council on July 21, 2020
Budget Engagement Session held on August
17, 2020
City Council directed staff to make reductions
to preliminary tax levy
2021 Budget & Tax Levy
Will be affected by COVID-19 in some way
Budget being presented will still meets needs
of community, but does offer lower level of
service than in 2020
2021 General Fund Budget
Balanced Budget
Revenues = Expenditures
$15,750,838
2.53% Increase from 2020
2021 General Fund Revenues
Local Government Aid amounts have been
certified and included in budget
Increase of $118,725 over draft budget presented
on July 21, 2020
Total of $853,671, a 16.2% increase over 2020
2021 General Fund Revenues
Local Government Aid (Continued)
State is projecting a $4.7 billion deficit during next
biennium (7/1/2021 –6/30/2023)
Certified amount can still be impacted by the
actions of Legislature or Governor
2021 General Fund Revenues
Other revenue categories budgeted
conservatively
Charges for services decreased by $22,800 from
2020 Budget
Miscellaneous revenue decreased by $48,300
from 2020 Budget
2021 General Fund Revenues
Total General Fund Levy of $12,808,552
2.64% Increase to General Fund Levy
2021 General Fund Revenue
Budget Proposed % Increase
FY2019 FY2020 (Decrease)
Property Taxes 12,564,305 12,893,552 2.62%
Intergov't Revenue 1,352,946 1,474,671 9.00%
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 15,750,838 2.53%
2021 General Fund Revenue
2021 General Fund Expenditures
General Fund Reductions -$100,000
Open public works superintendent position was
eliminated
Creates ongoing savings after 2021 budget
2021 General Fund Expenditures
General Fund Reductions -$100,000
(continued)
25% reduction in crack sealing on City Streets
20% reduction in tree re-planting
No pole painting in 2020
2021 General Fund Expenditures
COVID-19 Contingency Reduction -$150,000
New request was removed from the Budget
City still has a $50,000 contingency budget, which
is consistent with 2020
2021 General Fund Expenditures
COVID-19 Contingency Reduction -$150,000
(continued)
Equipment Replacement or Capital Improvement
Funds could be used as one-time contingency
Additional impacts from COVID-19 could come
from existing reserves of further reductions
2021 General Fund Expenditures
Budget Draft % Increase
FY2020 FY2021 (Decrease)
General Government 1,932,032 1,985,244 2.75%
Community Services 1,653,186 1,650,085 -0.19%
Public Safety 7,461,159 7,808,981 4.66%
Public Works 3,443,017 3,469,191 0.76%
Recreation 783,122 748,137 -4.47%
Other 89,200 89,200 0.00%
15,361,716 15,750,838 2.53%
2021 General Fund Expenditures
2021 Tax Levy
Burnes Park Debt Service -$150,000
Reduction to the debt levy
Redirect franchise fees previously dedicated to
ongoing park improvements
Five year plan includes projects at:
Shady Oak Beach, Cottageville Park, Maetzold Field,
Oakes Park and Downtown Park
2021 Tax Levy
Burnes Park Debt Service -$150,000
(continued)
Capital Improvement Plan would need updating
Tax levy is planned through 2032
One-time or continued
Draft 2021 Tax Levy
ACTUAL DRAFT % Increase
Purpose FY2020 FY2021 (Decrease)
General Operations
General Fund 12,479,305 12,808,552 2.64%
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 13,904,734 4.71%
Debt Levy 4,250,154 4,118,650 -3.09%
Total Levy 17,529,684 18,023,384 2.82%
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 -$1,867*
Increase of $40 or 2.19%
*estimated based on preliminary tax
capacity information
Next Steps
Adopt Preliminary Budget and Tax Levy on
September 15
Review 2021 HRA Levy
September 1, 2020
Review 2021 HRA Levy
Main revenue source for the City’s Economic
Development Fund
Levy Limits are in place for this levy of
0.01850% of the City Estimated Market Value
Review 2021 HRA Levy
Has been set at maximum allowed over the
past 5 years
Tax Year Percentage Increase
2016 8.89%
2017 4.51%
2018 6.81%
2019 5.68%
2020 5.08%
Review 2021 HRA Levy
Option 1: Approve a levy of $407,727, a
$39,776 or 10.81% increase from 2020
Consistent with prior years
Allows maximum flexibility in Economic
Development Fund
Preliminary and can be reduced
Review 2021 HRA Levy
Option 2: Approve a levy of $378,070, a
$10,119 or 2.75% increase from 2020
Allows some flexibility in Economic Development
Fund
Preliminary and can be reduced
Next Step
Adopt Preliminary Levy on September 15