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VI.5. Set the 2016 Preliminary Levy and Budget; HarkessSeptember 1, 2015 Council Report 2015-092 APPROVE PROPOSED 2016 LEVY, PROPOSED 2016 GENERAL FUND BUDGET AND SET BUDGET MEETING DATE Proposed Action Staff recommends adoption of the following motions: Move to approve Resolution 2015-060 “Approving proposed 2016 tax levy, debt service levies at levels under those required in the bond covenants, proposed 2016 general fund budget, and setting budget meeting dates”. Adoption of resolution 2015-060 will set a maximum tax levy for 2016, will set debt levies at amounts sufficient to pay debt service requirements taking into consideration other revenue sources and fund reserves, and approve a proposed 2016 general fund budget.Actual budget and tax levy adoption will not occur until December 2015. Overview th The City is required to certify a proposed tax levy and submit it to the county by September 30. There is also a requirement to hold a public meeting on the budget where public comments are taken. Staff is suggesting December 1, 2015 as an appropriate date to discuss the budget. This will allow us to take into consideration comments from the public prior to adopting the budget. If there are no changes to the proposed budget if can be approved at that same meeting. A proposed general fund budget has been established and is attached for your review. Adoption of the actual budget will occur in December 2015 following the public comment meeting, and at that time, the final levy may not exceed the approved proposed levy. The city council is charged with the authority to establish a budget for 2016 and set the preliminary levy. Levy limits were removed for 2015 and have not been reinstated, however the Financial Management Plan adopted by the Council in February 2014 was the basis for establishing the levy and budget. Staff is recommending that council approve the resolution setting the proposed levy for general fund operations; approve the levy adequate for the payment of debt, and to set budget meeting dates as set forth in the resolution. Primary Issues to Consider Legislative impacts 2016 budget concerns Supporting Information Power point presentation 2016 proposed general fund budget and tax levy Resolution 2015-060 Financial Management Plan overview ____________________________________ Christine M. Harkess. CPA, CGFM Finance Director Financial Impact: $ 11,875,730 Budgeted: Y/N X N Source: Taxes and other revenues Related Documents (CIP, ERP, etc.): __2016 budget__ ______Notes: ____ ________________ Staff Analysis 2014/15Legislative Actions Local government aid (LGA), a property tax relief program to cities, that ensures residents have access to basic services, regardless of where in Minnesota they live, was reinstated in 2014. Our allocation was increased for 2015 by $98,702 and again in 2015 by $25,342. We will be receiving a total of $413,944 for 2015 with all of it going to the General Fund. We are required to use these funds to reduce the tax levy. Levy limits last repealed for 2005 were reinstated for the years 2009-2011, were repealed for 2012 and 2013 were reinstated for 2014 and once again removed in 2015. The option for a special PERA levy to cover state mandated employer PERA increases was removed for 2014 and once again allowed in 2015. 2016Levy The tax levy proposed totals $11,949,829 which includes levies for the General Fund, Arts Center, Pavilion and bonded debt. Details are included in the attached summary of tax levy. The Housing and Redevelopment Authority levy for 2016 is a continuation of the reinstatement of their past levy authority. The HRA levy is a separate levy that is shown separately on the tax statements under “Other Taxing Districts”. 2016 Budget Analysis The 2016 general fund budget, and the 2016 general operating tax is proposed at $11,875,730 and $9,676,451 respectively. The proposed levy based on the budget and FMP and can only be reduced from this point forward. The general fund budget is currently proposed to increase by 4.66% over the 2015 budget and is balanced. Expenditures include wage increases for employees, increase in employer contribution to health insurance, bringing the parking enforcement office to FT with police property room management duties, adding two full-time firefighters, eliminating two part-time receptionists and normal inflationary increases. Because we are a service related operation, salaries and benefits compose 77% of current general fund expenditures and any labor negotiations have a tremendous impact on the budget. The council and staff will continue to work on a final budget that will allow for essential programs and services to be accomplished. Attached to this report is a summary of 2016 general fund budget revenues by revenue type and expenditures by department. 2015 Budget Meeting for the 2016 Budget and 2016 Tax Levy The 2009 Legislature made significant changes to the truth-in-taxation (TNT) requirements, essentially abolishing the th old scheme. The new law now requires that on or before September 30 at a regularly scheduled meeting at which the city council adopts a proposed tax levy, the city council must also announce: The time and place of the council’s next regularly scheduled meetings at which the budget and levy will be discussed and must not be held before 6 pm. The date and time of the regularly scheduled meeting at which a final budget and levy will be determined. That the public will be allowed to speak at these subsequent meetings. th On or before September 30, the time as place of regularly scheduled meetings dealing with the budget and levies must be included in the minutes. Therefore, staff is recommending the City Council budget meeting be set for December 1, 2015 with possible adoption of the final budget at that same meeting. 8/26/2015 2016 Preliminary Levy and Budget City Presentation TruthinTaxationProcess •Council adopts proposed levy and budget by Sept 30th •Council sets budget meeting date to discuss budget and receive public comments •Budget Meeting –Tuesday, December 1 st •Budget Approval –at that same meeting or next scheduled council meeting •Parcel specific notices are mailed by County 1 8/26/2015 City Presentation LegislativeChanges •Local Government Aid increased for 2016 •Levy Limits were removed in 2015 and were not reinstated City Presentation CityPlanning •Priority –balanced budget •Equipment Replacement Plan (ERP) •Capital Improvement Plan (CIP) •Financial Management Plan (FMP) •Utility Rate Study 2 8/26/2015 City Presentation 2016ProposedGeneralFundBudget •Prepared according to the Financial Management Plan •Includes funding for a Police property room manager (bringing the PT Parking Enforcement Officer to FT) •Includes funding for two FT Firefighters •Takes into consideration staffing reorganization and reductions due to retirements City Presentation WhatisaFinancialManagementPlan? •A multi-year fiscal plan for all tax-supported funds •Integrates: • Existing Debt • Capital Improvement Plans • Future Debt • Tax base growth • Future operating expenses •Compares entity to standards • Government Finance Officers Association (GFOA) • Similar entities 3 8/26/2015 City Presentation WhatMakesitPractical? • Helps to manage expectations • New spending proposals evaluated against other identified priorities • Weigh proposals vs. predefined affordability parameters • Helps to maintain assets • Regular replacements • Large periodic repairs • Reduces stress during budget process • Previously agreed spending guidelines • Better understanding of the effect decisions have • Rating Agencies like multi-year planning • Reduces reactivity amidst an unpredictable fiscal environment and unfunded mandates City Presentation 2016ProposedGeneralFundBudget •Revenues & Expenditures -$11,875,730 •Budget is balanced •Local Government Aid totals $413,944, a $25,342 increase •Other state aid increases •Levy is in line with the Financial Management Plan adopted in 2014 4 8/26/2015 City Presentation 2016ProposedGeneralFundBudget •Budget Impacts •Salary adjustments per bargaining agreements •Health insurance contribution increase •Two union contracts remain unsettled City Presentation 2016GeneralFundExpenditures % 20152016Change General Government$1,378,084$1,430,2013.78% Community Services985,8891,047,7556.28% Public Safety5,518,1655,842,8445.88% Public Works2,517,8802,580,6212.49% Recreation591,498618,3624.54% Comm Dev & Planning228,409275,74720.73% Other126,79180,200-36.75% $11,346,716$11,875,7304.66% 5 8/26/2015 City Presentation 2016GeneralFundExpenditures City Presentation 2016GeneralFundRevenues % 20152016Change Property Taxes$9,307,729$9,796,9515.26% Intergovt'l Revenue843,112891,9545.79% License, Permits & Fines569,975575,7751.02% Charges for Service209,300188,900-9.75% Miscellaneous401,600402,1500.14% Interest15,00020,00033.33% Total$11,346,716$11,875,7304.66% 6 8/26/2015 City Presentation 2016GeneralFundRevenues City Presentation Preliminary2016Levy 2016 Net Levy Purpose2015Proposed General Operations General Fund$9,224,729$9,676,451 Capital Levy53,000$125,000 Arts Center Levy85,000$140,000 Pavilion Levy65,000$65,000 PERA Levy35,500$35,500 Subtotal 9,463,22910,041,951 Special Levies: Debt Levies 1,514,8441,907,878 TOTAL LEVY$10,978,073$11,949,829 7 8/26/2015 City Presentation Preliminary2016Levy •Arts Center Levy –Needed to eliminate deficit –Helps with obtaining grant funds •Pavilion Levy –To be used for fund capital needs •Capital Levy –To balance levy needs City Presentation PurposeofLevies •Arts Center & Pavilion –Visitors stimulate local economy –Make Hopkins a more desirable place to live –Needed to keep Pavilion building current –Needed to restore Arts Center to sound financial status –Strengthens position when requesting grant funds •Bond Rating increased from AA to AA+ –Direct result of implementing the FMP 8 8/26/2015 City Presentation TaxImpactonAverageHome($225k) •Original FMP scheduled a $94 increase •Updated Net Tax Capacity information –New tax capacity –Growth in tax capacity •Reduced levy impact to an estimated $40 City Presentation Whatthisbudget/levygetsus: •Funding for general city operations •Funding for road projects •Funding to reduce Arts Center deficit •Funding for Pavilion capital needs •Funding for debt service payments 9 8/26/2015 City Presentation NextSteps •Adopt proposed budget and levy at September 1 st Council meeting and certify to County •Parcel specific notices mailed by County •Hold the Public Meeting on the budget and levy at the December 1 st Council meeting •Approve levy & budget by December 29 th 10 CITY OF HOPKINS Hennepin County, Minnesota RESOLUTION NO. 2016-060 RESOLUTION APPROVING THE PROPOSED 2016 TAX LEVY, SETTING DEBT SERVICES LEVIES AT LEVELS UNDER THOSE REQUIRED IN THE BOND COVENANTS, APPROVINGTHE PROPOSED 2016 BUDGET, AND SETTING BUDGET MEETING DATE BE IT RESOLVED BY THE COUNCIL OF THE CITY OF HOPKINS, MINNESOTA, That the following sums be levied for 2016 upon the taxable property in the City of Hopkins, for the following purposes. General Levy General Fund $10,041,951 Special Levies Debt Levies 2010A GO Improvement Bonds 79,437 2012A GO Capital Improvement Bonds 220,000 2012B GO Bonds 141,970 2012B Equipment Certificates 96,285 2014A GO Bonds 87,993 2014B GO Refunding Bonds 881,975 2015A GO Street Reconstruction Bonds 264,261 2015B GO Tax Abatement Bonds 135,957 Subtotal Special Levies 1,907,878 Total Levy $11,949,829 HRA/EDA Levy $ 296,813 Housing & Redevelopment Authority Levy That based upon staff analysis of specials assessments currently levied for Permanent Improvement Bonds, alternative revenue sources for the Capital Improvement Bonds and Equipment Certificates, and available reserves within all debt service funds listed below, that the debt service levies for 2016 for the following issues be levied at amounts less than that provided by the bond covenants. Net Debt Bond Issue Service Levy $5,505,000 G.O. Bonds of 2012B (B2833) $ 141,970 $5,505,000 G.O. Bonds of 2012B (EC) (B2833) $ 96,285 $3,650,000 G.O. Improvement Bonds of 2013A (B2883) $ 0 $1,895,000 G.O. Improvement Bonds of 2014A (B2964) $ 87,993 $6,345,000 G.O. Refunding Bonds of 2014B (B2983) $ 881,975 $4,100,000 G.O. Street Reconstruction Bonds of 2015A (B3031) $ 264,261 That the Proposed 2016 General Fund Budget be set at $11,875,730. That the budget meeting to discuss the 2016 budget and tax levy be set for December 1, 2015 at 7:00 pm in the City Council Chambers. BE IT FURTHER RESOLVED that the City Clerk is hereby ordered and directed to transmit a certified copy of this resolution to the County Auditor of Hennepin County, Minnesota. st Adopted by the City Council of the City of Hopkins this 1 day of September 2015. By Eugene Maxwell, Mayor ATTEST: Amy Domeier, City Clerk CITY OF HOPKINS PROPOSED GENERAL FUND REVENUE BUDGET 20152016% DepartmentBudgetBudgetIncr/(Decr) 9,307,7299,796,9515.26% Property Taxes Intergovernmental Revenue 20,51020,5100.00% PERA Aid 388,602413,9446.52% Local Government Aid 180,000195,0008.33% Police - State Aid 9,0009,0000.00% Police - POST Reimbursement 15,00015,0000.00% Police - Misc Grants 95,00095,0000.00% Fire - State Aid 135,000140,0003.70% PW - State Aid 03,500-- Grants - other 843,112891,9545.79% Total Intergovernmental Revenue Licenses, Permits & Fees 170,000175,0002.94% Court Fines 274,460275,6600.44% Building Permit & Inspection Fees 8,0008,0000.00% Administrative Citations 6,0006,0000.00% Business Licenses 97,50097,100-0.41% Liquor , Animal Licenses & Penalties 3,6003,6000.00% Fire Licenses & Permits 9,4159,4150.00% PW - Licenses & Permits 1,0001,0000.00% P&Z - License & Permits 569,975575,7751.02% Total Licenses, Permits & Fines Charges for Service 10,1509,750-3.94% Finance Department 2,0002,0000.00% Assessing 20,0000-100.00% City Clerk 74,90074,9000.00% Inspections 33,00033,0000.00% Police 3,0003,0000.00% Fire 2,7502,250-18.18% Public Works 61,50061,5000.00% Activity Center 2,0002,50025.00% Planning & Zoning 209,300188,900-9.75% Total Charges for Service Miscellaneous Revenue 290,000290,0000.00% Franchise Fees 2502500.00% Miscellaneous 4,8004,8000.00% Finance Department 1,5002,00033.33% Police 03,500-- Fire 4,6004,6000.00% Public Works 9,00010,00011.11% Acitivty Center 91,45087,000-4.87% Community Development 401,600402,1500.14% Total Miscellaneous Revenue 15,00020,00033.33% Interest Earnings $11,875,73011,346,716$4.66% Total Revenues CITY OF HOPKINS PROPOSED GENERAL FUND EXPENDITURE BUDGET 20152016Budget % DepartmentBudgetBudgetIncr/(Decr) City Council70,41779,70813.19% Administrative Services Administration210,187185,872-11.57% Personnel 42,40059,10839.41% Wellness 2,0002,0000.00% Information Services275,206284,9893.55% 0.41% Total Administrative Services529,793531,969 Finance Debt Management5600.00% General Accounting199,107201,6511.28% Payroll49,09282,17467.39% TIF Administration5600.00% Utility Billing10,0639,000-10.56% 13.33% Total Finance258,374292,825 gal145,000150,0003.45% Le pal Building325,306333,6112.55% Munici ptionist49,19442,088-14.44% Rece g196,256206,6175.28% Assessin y Clerk Cit City Clerk68,01963,774-6.24% Elections52,41583,49459.29% y Clerk120,434147,26822.28% Total Cit pections Ins Building Code Inspections274,151283,3103.34% Fire Inspections39,31740,8703.95% Heating & Plumbing Inspections94,19196,9662.95% Housing Inspections172,522180,8534.83% Misc. Community Inspections84,22587,0013.30% Vacant Property Management4,7934,8701.61% pections669,199693,8703.69% Total Ins Police Police Administration437,046447,2042.32% Patrol2,885,7853,118,5188.06% Heat Team76,63179,2713.45% Reserves15,62920,47431.00% Investigations564,929465,405-17.62% Metro Drug Task Force120,300129,3877.55% Outreach110,830113,7222.61% Reception-Records269,008278,9713.70% Systems Management51,65858,94314.10% 4.54% Total Police4,531,8164,737,734 20152016Budget % DepartmentBudgetBudgetIncr/(Decr) Total Fire986,3491,105,11012.04% Public Works PW Building39,49044,30912.20% Equipment Services112,011108,117-3.48% Administration46,99257,14521.61% Engineering145,232141,447-2.61% Street & Alleys932,379944,2261.27% Snow & Ice Removal219,827221,9960.99% Parks765,779789,1473.05% Forestry256,170274,2347.05% 2.49% Total Public Works2,517,8802,580,621 Recreation Playground21,67622,1102.00% Ice Rink14,39516,54814.96% Park Service25,78026,8404.11% Joint Recreation162,000165,3002.04% Skate Park8,0317,776-3.18% 2.89% Total Recreation231,882238,574 y Center Activit Act Ctr - Community Use300,111315,1385.01% Act Ctr - Maintenance59,50564,6508.65% y Center359,616379,7885.61% Total Activit g & Zoning136,264153,87212.92% Plannin y Development92,145121,87532.26% Communit 0.00% Tuition Reimbursement15,20015,200 gency101,59150,000-50.78% Contin penditures11,336,71611,860,7304.62% Total Ex g Uses Other Financin 10,00015,00050.00% Transfers to other funds g Uses10,00015,00050.00% Total Other Financin penditures11,346,716$ 11,875,730$4.66% Grand Total Ex $ 11,875,73011,346,716$ Total Revenues Revenues Over (Under) Expenditures-$ -$ CITY OF HOPKINS 2016 TAX LEVY 2016 Net Levy Purpose20142015Proposed General Operations General Fund8,869,774$ $9,224,7299,676,451$ Capital Levy125,000 53,000125,000 Arts Center Levy085,000140,000 Pavilion Levy065,00065,000 PERA Levy035,50035,500 8,994,7749,463,22910,041,951 Special Levies - Debt: 2007B GO Improv Revolving Bonds188,093 00 2007A Capital Improvement Bonds766,110 00 2010A GO Improvement Bonds79,175 82,19479,437 2012A GO CIP Bonds220,000 220,000220,000 2012B GO Bonds55,090 70,000141,970 2012B Equipment Certificates97,965 96,28596,285 2013A GO Improvement Bonds15,028 75,0000 2014A GO Bonds088,47187,993 2014B GO Refunding Bonds0882,894881,975 2015A GO SROP Bonds00264,261 2015B GO Tax Abatement00135,957 Subtotal - Debt Levies1,421,4611,514,8441,907,878 TOTAL LEVIES$10,416,235$10,978,073$11,949,829 HRA Levy $273,980$272,572$296,813 /źƷǤƚŅIƚƦƉźƓƭCźƓğƓĭźğƌağƓğŭĻƒĻƓƷtƌğƓ Traditionallycitieshavetakenashorttermviewforfinancingcityoperations.Theoneyearbudgetisstillthe normformostcities.Inthe1980stheCityofHopkinsdidbegintousemorelongtermplanningforlarge expendituressuchasconstructionprojectsandlargepiecesofequipment.TheCity,however,continuedtouse oneyearbudgetsforitsdaytodayoperations. Longertermplanningisbecomingtheindustrystandard.Rating Standard & Poor’s announced in January 2014 that the City of Hopkins’ bond rating agencies,likeStandardandtƚƚƩ͸ƭͲlikemultiyearplanswhen was upgraded from AA to AA+. Among the assessingthefinancialhealthofacity.Abettercreditratingcan factors which Standard & Poors used in resultinlowerborrowingcosts.Longertermplanningcanalsohelp making this decision included: “a very strong budgetary flexibility, “strong overall theCityspottrendsthatcouldadverselyaffectthebudget. budgetary performance”, and “strong financial management practices.” DuringthepreparationoftheFinancialManagementPlan,theCity lookedatoveralltaxcapacity,thegeneralfundbalance,whatthetaxlevypaysfor,historicandprojectedtax rates,projectedtaximpactsonanaveragehome,existingdebtandnewdebt.Twospecificissuesthatneededto beaddressedconcernedtheCenterfortheArtsandtheIceArena/Pavilion. Historically,theCenterfortheArtsreceivedasubsidyfromthe EconomicDevelopmentFund.Thereasonbehindthiswasthatthe CenterhasanimpactontheeconomichealthoftheCityandthe downtownareainparticularbybringinginover200,000visitorseach year.However,devotingthesefundstotheCentermeantthatthere werefewerresourcestodevotetootherdevelopmentprojectsinthe City.AccordingtotheadoptedFinancialManagementPlan,this subsidywillbereplacedbysupplementalfundingthroughtheGeneral FundinamannersimilartotheActivityCenter. TheIceArena/Pavilionactuallypaysforitsdaytodayoperationsthroughfees whicharechargedtotheusers.ThePavilion,however,willsoonbe25yearsold. Anaginginfrastructureandchangestofederalandstaterulesregardingice arenaswillrequiresignificantcapitalexpenditures.Generalfunddollarswill havetobeusedtosupplementtheuserfeesinordertokeepthisfacility operatingintothefuture. TheFinancialManagementPlanwillgetupdatedeveryyearandwillbeatoolto assisttheCouncilandstaffinmakingdecisionsatbudgettime.Havingavisionandplanningforthefutureis importantinshapingthedirectionofthecity.ThePlanwillensurethatmoneyisavailabletofinanceneeded roadconstruction,capitalequipmentandmaintenanceofCityownedfacilities.Italsoprovidesadequate reserves/fundbalancesanditreducestheneedforfutureborrowing. Prepared by the City of Hopkins Finance Department For further information contact the Finance Department at 952-548-6330.