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VII.2. 2017 Budget Meeting, 2017 Tax Levy and General and Special Revenue Fund Budgets; HarkessDecember 6, 2016 Council Report 2016-118 2017 BUDGET MEETING, 2017 TAX LEVY AND GENERAL AND SPECIAL REVENUE FUND BUDGETS Proposed Action Following the 2017 budget hearing and there being no further changes to the 2017 budget, staff recommends adoption of the following motion: Move to Adopt Resolution 2016-080 approving the 2017 tax levy and adopting the 2017 General and Special Revenue Fund budgets. Adoption of this motion will result in staff forwarding the appropriate documentation to Hennepin County for inclusion on property taxes for 2017 and will approve the 2017 General and Special Revenue Fund budgets. Overview The City Council and staff have held a number of meetings and work sessions during 2016 to prepare for the 2017 general fund budget and 2017 tax levy. This evening we are taking input from the public on the 2017 budget. During 2016 the council adopted the Capital Improvement Plan, the Equipment Replacement Plan and updated the Financial Management Plan which along with a series of program and budget discussions were instrumental in the development of the 2017 budgets. The budget in its current form recommends spending in the general fund at $12,835,312 and a total tax levy of $12,945,032. The levy includes provisions for general fund operations and debt obligations. In addition, a proposed HRA levy of $310,200 was also approved. Staff is recommending that the council adopt the resolution approving the tax levy for 2017 and setting the 2017 general and special revenue fund budgets. Primary Issues to Consider  The state mandates certification of the 2017 levy to the County Auditor no later than December 28, 2016. Supporting Information  Resolution 2016-080  2017 General Fund and Special Revenue Fund Budgets  Power point presentation slides  Publication from Assoc. of MN Counties – “Fourteen Reasons Why Property Taxes Vary from Year to Year” Christine M Harkess, CPA, CGFM Finance Director Financial Impact: $ 12,835,312 GF Budgeted: Y/N Y Source: Taxes & other revenues Related Documents (CIP, ERP, etc): 2017 Budget, CIP, ERP, FMP Notes: CITY OF HOPKINS Hennepin County, Minnesota RESOLUTION NO. 2016-080 RESOLUTION APPROVING 2017 TAX LEVY AND ADOPTING THE 2017 GENERAL AND SPECIAL REVEUNE FUND BUDGETS BE IT RESOLVED BY THE COUNCIL OF THE CITY OF HOPKINS, MINNESOTA, That the following sums of money be levied for the current year collectible in 2017 upon the taxable property in the City of Hopkins, for the following purposes. General Levy General $10,841,666 Special Levies Debt Levies 2010A GO Improvement Bonds 81,472 2012A GO Capital Improvement Bonds 220,000 2012B GO Bonds 140,000 2012B Equipment Certificates 94,605 2013A GO Bonds 93,388 2014A GO Bonds 97,000 2014B GO Refunding Bonds 821,625 2015A GO Street Reconstruction Bonds 264,576 2015B GO Tax Abatement Bonds 139,792 2016A GO Improvement Bonds 111,413 2016B GO Tax Abatement Bonds 39,495 Subtotal Special Levies 2,103,366 Total Levy $12,945,032 HRA/EDA Levy Housing & Redevelopment Authority Levy $ 310,200 This levy is made based on current law and the 2017 General Fund Budget of $12,835,312. BE IT FURTHER RESOLVED, that the following amounts are budgeted for the Special Revenue Funds: State Chemical Assessment $ 60,000 TIF 2.6 Handicapped Housing Dev $ 6,976 Economic Development $ 210,449 TIF 2.11 Super Valu $ 1,790,665 TIF 1.2 Entertainment District $ 17,758 5th Avenue Flats $ 2,000 Parking $ 110,928 TIF 1.4 - Marketplace & Main $ 120,950 Communication (Cable TV) $ 289,747 Art Center $ 1,234,505 Depot Coffee House $ 346,036 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. Adopted by the City Council of the City of Hopkins on this this 6th day of December, 2016. _______________________________________ Molly Cummings, Mayor ATTEST: _____________________________ Amy Domeier, City Clerk 2016 2017 % Department Budge t Budget Incr/(Decr ) Property Taxes 9,796,951 10,366,666 5.82% Intergovernmental Revenue PERA Aid 20,510 20,510 0.00% Local Government Aid 413,944 423,916 2.41% Intergovernmental Revenue - other 457,500 584,000 27.65% Total Intergovernmental Revenue 891,954 1,028,426 15.30% Licenses, Permits & Fees Court Fines & penalties 176,500 176,500 0.00% Building Permits & Inspections 275,660 385,660 39.90% Inspections fines & citations 8,000 8,000 0.00% Citry Clerk - Business License s 6,000 7,050 17.50% PD - Liquor , Animal Licenses & Pena 95,600 95,600 0.00% Fire Licenses & Permits 3,600 3,800 5.56% PW - Licenses & Permits 9,415 27,115 188.00% P&Z - License & Permits 3,500 3,500 0.00% Total Licenses, Permits & Fines 578,275 707,225 22.30% Charges for Service Finance Department 9,750 9,750 0.00% Assessin g 2,000 3,000 50.00% Inspections 74,900 74,850 -0.07% Police 33,000 33,000 0.00% Fire 3,000 3,000 0.00% Public Works 2,250 2,750 22.22% Activity Cente r 61,500 66,500 8.13% Total Charges for Service 186,400 192,850 3.46% Miscellaneous Revenue Franchise Fees 290,000 290,000 0.00% Miscellaneous 20,250 20,250 0.00% Finance Department 4,800 5,100 6.25% Elections 0 20,000 -- Police 2,000 2,000 0.00% Fire 3,500 3,500 0.00% Public Works 4,600 4,600 0.00% Acitivty Cente r 10,000 10,000 0.00% Planning 0 94,695 -- Community Development 87,000 90,000 3.45% Total Miscellaneous Revenue 422,150 540,145 27.95% Total Revenues 11,875,730$ 12,835,312$ 8.08% CITY OF HOPKINS PROPOSED GENERAL FUND REVENUE BUDGE T 2016 2017 Budget % Department Budge t Budge t Incr/(Decr) City Council 79,708 82,898 4.00% Administrative Services Administration 185,872 192,898 3.78% Personnel 59,108 95,869 62.19% Wellness 2,000 2,500 25.00% Information Services 284,989 324,494 13.86% Total Administrative Services 531,969 615,761 15.75% Finance Debt Management 0 0 0.00% General Accounting 185,819 183,093 -1.47% Payroll 82,174 80,515 -2.02% TIF Administration 0 0 0.00% Utility Billing 9,000 9,000 0.00% Total Finance 276,993 272,608 -1.58% Legal 150,000 150,000 0.00% Municipal Building 333,611 342,934 2.79% Receptionist 42,088 42,060 -0.07% Assessing 206,617 220,322 6.63% City Clerk City Clerk 63,774 108,260 69.76% Elections 83,494 57,794 -30.78% Total City Clerk 147,268 166,054 12.76% Inspections Building Code Inspections 283,310 284,825 0.53% Fire Inspections 40,870 40,892 0.05% Heating & Plumbing Inspections 96,966 96,958 -0.01% Housing Inspections 180,853 181,112 0.14% Misc. Community Inspections 87,001 87,041 0.05% Vacant Property Manag ement 4,870 4,870 0.00% Total Inspections 693,870 695,698 0.26% Police Police Administration 447,204 486,032 8.68% Patrol 3,144,357 3,318,946 5.55% SWAT 79,271 79,773 0.63% Reserves 20,474 20,499 0.12% Investi g ations 465,405 487,003 4.64% Metro Drug Task Force 129,387 134,957 4.30% Outreach 113,722 113,747 0.02% Reception-Records 278,971 279,098 0.05% CITY OF HOPKINS PROPOSED GENERAL FUND EXPENDITURE BUDGET 2016 2017 Budget % Department Budge t Budge t Incr/(Decr) Systems Mana g ement 58,943 64,091 8.73% Total Police 4,737,734 4,984,146 5.20% Total Fire 1,105,110 1,162,063 5.15% Public Works PW Building 44,309 53,147 19.95% Equipment Services 108,117 120,092 11.08% Administration 57,145 57,190 0.08% Eng ineering 141,447 143,573 1.50% Street & Alleys 944,226 1,114,067 17.99% Snow & Ice Removal 221,996 220,638 -0.61% Parks 789,147 772,286 -2.14% Forestry 274,234 283,623 3.42% Total Public Works 2,580,621 2,764,616 7.13% Recreation Playg round 22,110 22,755 2.92% Ice Rink 31,080 31,618 1.73% Park Service 26,840 27,162 1.20% Joint Recreation 165,300 169,500 2.54% Skate Park 7,776 8,676 11.57% Total Recreation 253,106 259,711 2.61% Activity Center Act Ctr - Community Use 315,138 329,287 4.49% Act Ctr - Maintenance 64,650 71,950 11.29% Total Activity Center 379,788 401,237 5.65% Planning & Zoning 153,872 243,162 58.03% Community Development 121,875 121,842 -0.03% Tuition Reimbursement 15,200 15,200 0.00% Contingency 51,300 280,000 445.81% Total Expenditures 11,860,730 12,820,312 8.09% Other Financing Uses Transfers to other funds 15,000 15,000 0.00% Total Other Financing Uses 15,000 15,000 0.00% Grand Total Expenditures 11,875,730$ 12,835,312$ 8.08% Total Revenues 11,875,730$ 12,835,312$ Revenues Over (Under) Expenditures -$ -$ REVENUES Fund 2016 2017 No. Fund BUDGET BUDGET Incr/(Decr) 203 State Chemical Assessment 60,000 60,000 0.00% 204 Economic Development 356,113 396,200 11.26% 211 TIF 1.2 Entertainment District 58,500 31,000 -47.01% 214 Parking 138,000 144,500 4.71% 217 Communications (Cable TV) 257,000 289,747 12.74% 219 Depot Coffee House 349,100 346,036 -0.88% 226 TIF 2.6 Handicapped Housing Dev 42,352 6,976 -83.53% 229 TIF 2.9 Pines 121,200 - -100.00% 231 TIF 2.11 Super Valu 2,415,000 1,790,665 -25.85% 232 5th Avenue Flats - 2,000 #DIV/0! 233 TIF 1.4 - Marketplace II 122,100 120,950 -0.94% 250 Art Center 787,108 1,234,505 56.84% EXPENDITURES Fund 2016 2017 No. Fund BUDGET BUDGET Incr/(Decr) 203 State Chemical Assessment 60,000 60,000 0.00% 204 Economic Development 176,600 210,449 19.17% 211 TIF 1.2 Entertainment District 13,236 17,758 34.16% 214 Parking 109,600 110,928 1.21% 217 Communications (Cable TV) 226,273 289,747 28.05% 219 Depot Coffee House 338,142 346,036 2.33% 226 TIF 2.6 Handicapped Housing Dev 7,568 6,976 -7.82% 229 TIF 2.9 Pines 3,200 - -100.00% 231 TIF 2.11 Super Valu 1,605,258 1,790,665 11.55% 232 5th Avenue Flats 2,000 2,000 0.00% 233 TIF 1.4 - Marketplace II 120,950 120,950 0.00% 250 Art Center 946,714 1,234,505 30.40% CITY OF HOPKINS SPECIAL REVENUE FUNDS 2017 12/1/2016 1 Public Meeting for the 2017 Levy & Budget December 6, 2016 •To discuss the City’s budget •To discuss how the city budget impacts the city portion of your taxes •The focus of the hearing is on the budget and levy, not property valuations •Property valuation discussions are held in the spring Purpose of the budget meeting 12/1/2016 2 •Preliminary Levy was set in September •Proposed tax notices mailed •Public meeting for final proposed levy and general fund budget •Final adoption of budget and levy •December 6th council meeting providing there are no changes to the proposed budget. Taxation Process General Fund Revenues % 2016 2017 Change Property Taxes $9,796,951 $10,366,666 5.82% Intergovt'l Revenue 891,954 1,028,426 15.30% License, Permits & Fines 578,275 707,225 22.30% Charges for Service 186,400 192,850 3.46% Miscellaneous 422,150 540,145 27.95% Total $11,875,730 $12,835,312 8.08% 12/1/2016 3 General Fund Revenues General Fund Expenditures % 2016 2017 Change General Government $1,372,281 $1,464,201 6.70% Community Services 1,089,843 1,124,134 3.15% Public Safety 5,842,844 6,146,209 5.19% Public Works 2,580,621 2,764,616 7.13% Recreation 632,894 660,948 4.43% Comm Dev & Planning 275,747 365,004 32.37% Other 81,500 310,200 280.61% $11,875,730 $12,835,312 8.08% 12/1/2016 4 General Fund Expenditures •Grants awarded •Wages & union contracts for 2017 •Personnel changes •Changes in operations •Comprehensive Plan for development (required every 10 years) Factors impacting the 2017 Budget 12/1/2016 5 2017 Levy 2017 2017 Final Net Levy Net Levy Purpose 2016 Proposed Proposed General Operations General Fund $9,711,951 $10,401,177 $10,281,666 Capital Levy $125,000 $310,000 $310,000 Arts Center Levy $140,000 $250,000 $250,000 Pavilion Levy $65,000 $0 $0 Subtotal 10,041,951 10,961,177 10,841,666 Special Levies: Debt Levies 1,907,878 2,103,316 2,103,366 TOTAL LEVY $11,949,829 $13,064,493 $12,945,032 Residential Property Tax Changes from 2016 12/1/2016 6 Residential Property Tax Changes ‐a comparison Percent of homeowners Percent of homeowners Percent of homeowners Percent of homeowners Percent of homeowners Percent of homeowners Decrease +0.1% - 4.9% +5.0% - 9.9%+10.0% - 14.9%+15.0% - 19.9%+20% and over 2016 37.20% 32.28% 23.21% 6.62% 0.33% 0.36% 2015 14.28% 5.99% 15.62% 32.08% 17.78% 14.22% 2014 56.91% 12.04% 16.14% 10.51% 3.58% 0.82% 2013 56.91% 12.04% 16.14% 10.51% 3.58% 0.82% Levy Impact on Median Valued Home Tax Value Rate Taxes Increase 2014 183,000 62.601% 1,015 3 2015 206,000 61.008% 1,143 127 2016 207,000 63.988% 1,206 63 2017 233,000 63.078% 1,298 93 Average increase over last 4 years is $72 12/1/2016 7 Where my taxes go Value for Taxes •24-Hour Police and Fire Protection •Emergency medical treatment and management services •Well Maintained Streets, Trails, and Sidewalks •Elections •Boulevard Tree and Forestry Program •High Quality Recreation programs •Hopkins Activity Center and Hopkins Depot •Hopkins Center for the Arts •Community and Economic Development •Housing Services and Programs •Building Inspections, Licensing, and Code Enforcement •Beautiful Parks and Open Space A publication of the Association of Minnesota CountiesA publication of the Association of Minnesota Counties THE MARKET VALUE OF A PROPERTY MAY CHANGE. • Each parcel of property is assessed at least once every five years and a sales ratio study is done to determine if the property is assessed similarly to like properties. If not, the Commissioner of Revenue may issue an ‘order’ that would affect the taxable value of a parcel. • Additions and improvement made to a property generally increases its market value. THE MARKET VALUE OF OTHER PROPERTIES IN YOUR TAXING DISTRICT MAY CHANGE, SHIFTING TAXES FROM ONE PROPERTY TO ANOTHER. • If the market value of a property increases more or less than the average increase or decrease in a taxing district, the taxes on that property will also change. • New construction in a taxing district increases the tax base and will affect the district’s tax rate. THE STATE GENERAL PROPERTY TAX MAY CHANGE. • The state legislature directly applies a State General Property Tax to commercial/industrial and season/recreational property classes. Fourteen Reasons WHY PROPERTY TAXES VARY FROM YEAR TO YEAR A publication of the Association of Minnesota Counties THE CITY BUDGET AND LEVY MAY CHANGE. • Each year, cities review the needs and wants of their citizens and how to meet those needs and wants. This is called ‘discretionary spending’ in the city budget. Also included in the budget is non-discretionary spending which is required by state and federal mandates and court decisions and orders. THE TOWNSHIP BUDGET AND LEVY MAY CHANGE. • Each March, townships set the levy and budget for the next year. THE COUNTY BUDGET AND LEVY MAY CHANGE. • Each year, counties review the needs and wants of their citizens and how to meet those discretionary needs and wants. In addition, also included in the county budget is non- discretionary spending which is required by state and federal mandates and court decisions and orders. As much as sixty to eighty-five percent of the county expenditures are used to deliver mandated services. THE SCHOOL DISTRICT’S BUDGET AND LEVY MAY CHANGE. • The Legislature determines basic funding levels for K-12 education and mandates services that schools must perform. On average, approximately seventy percent of school costs are paid by the state. • Local school districts set levies for purposes including safe school and community education, etc. A SPECIAL DISTRICT’S BUDGET AND LEVY MAY CHANGE. • Special districts such as the Metropolitan Council, hospital districts, watershed districts, drainage districts, etc. set levies to balance their budgets. SPECIAL ASSESSMENTS MAY BE ADDED TO YOUR PROPERTY TAX BILL. • Water lines, curb and gutter, and street improvements that directly benefit your property may be funded, in whole or in part, through a special assessment that is added to your tax bill. A publication of the Association of Minnesota Counties VOTERS MAY HAVE APPROVED A SCHOOL, CITY/ TOWNSHIP, COUNTY, OR SPECIAL DISTRICT REFERENDUM. • Local referendums may be held for local government construction projects, excess operating levies for schools or many other purposes. • Referendum levies may be spread on the market value or the tax capacity of a property depending on process and type of referendum levy. FEDERAL AND STATE MANDATES MAY HAVE CHANGED. • Both the state and federal governments require local governments to provide certain services and follow certain rules. These mandates often require an increase in the cost and level of service delivery. AID AND REVENUE FROM THE STATE AND FEDERAL GOVERNMENTS MAY HAVE CHANGED. • Each year the state legislature reviews and adjusts the level of funding for a variety of aids provided to local governments including Local Government Aid and County Program Aid. The formulas for how aid is determined and distributed among local governments may have changed. • While direct aid and revenue from the federal government to local governments has declined greatly in recent years, federal revenue continues to be a key portion of the local government revenue stream and that revenue stream may have changed. THE STATE LEGISLATURE MAY HAVE CHANGED THE PORTION OF THE TAX BASE PAID BY DIFFERENT TYPES OF PROPERTIES. • A change in class rates will require a change in the tax rate to raise the same amount of money. OTHER STATE LAW CHANGES MAY ADJUST THE TAX BASE. • Fiscal disparities, personal property taxes on utility properties, limited market value, and tax increment financing are example of laws that affect property taxes. Revised December 2011 Association of Minnesota Counties 125 Charles Avenue Saint Paul, MN 55103-2108 Main Line/Switchboard: 651.224.3344 Fax: 651.224.6540 www.mncounties.org Glossary of Terms CATEGORICAL AID: Aid given to a local unit of government to be used only for a specific purpose. CIRCUIT BREAKER: See “Property Tax Refund.” CLASS RATES: The percent of market value set by state law that establishes the property’s tax capacity subject to the property tax. COUNTY PROGRAM AID: State property tax relief aid to counties, distributed with a formula based on needs (households on foodstamps, age of the population, number of serious crimes) and tax base equalization for counties with smaller tax bases. EDUCATION AID: The total amount of state dollars paid for K-12 education. This aid is paid to the school districts. FISCAL DISPARITIES: A program in the Twin Cities metropolitan area and on the iron range in which a portion of the commercial and industrial property value of each city and township is contributed to a tax base sharing pool. Each city and township then receives a distribution of property value from the pool based on market value and population in each city. GENERAL PURPOSE AID: Aid given to units of government to be used at their own discretion. Examples are Local Government Aid and County Program Aid. HIGHWAY AID: Motor fuels tax and license tab money the state distributes to counties, cities and townships for highways and bridges. HOMESTEAD: A residence occupied by the owner. INDIVIDUAL INCOME TAX: A state tax on the income of residents and non-residents with Minnesota sources of income that is deposited into the state general fund. LEVY: The imposition of a tax, associated with the property tax. LEVY LIMIT: The amount a local unit of government is permitted to levy for specific services under state law. LIMITED MARKET VALUE: A state imposed limit on property value increases for the purpose of calculating property taxes. LOCAL GOVERNMENT AID (LGA): A state government revenue sharing program for cities with low property wealth or high service burdens that is intended to provide an alternative to the property tax. LOCAL SALES TAX: A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government. LOCAL TAX RATE: The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property. MARKET VALUE: An assessor’s estimate of what property would be worth if it were sold. MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce the property tax paid by agricultural homesteads to the local taxing jurisdiction. MARKET VALUE HOMESTEAD CREDIT: The Market Value Homestead Credit (MVHC) program was eliminated during the 2011 Special Session for taxes payable in 2012 and beyond. The credit was replaced with a market value exclusion. This guide describes the (MVHC) reimbursement program. The program was designed to provide state-paid property tax relief to owners of certain qualifying homestead property. This program has been replaced by the Market Value Homestead Exclusion (defined below). MARKET VALUE HOMESTEAD EXCLUSION: The exclusion reduces the taxable value of qualifying homesteads. Despite the decreased taxable value, taxes will increase on most properties including apartments and businesses and is independent of any action taken by local governments. The exclusion provides for a portion of each home’s market value to be excluded from its value for property tax calculations. The amount of value excluded is directly proportional to the MVHC the home received under the old law. In this way, each home contributes a smaller amount to each taxing jurisdiction’s tax base. The tax rate tends to be a little higher because of the reduced tax base, which is why taxes increase for the other types of property. The tax burden on any given homestead could be lesser or greater depending upon the mix of properties in the jurisdiction and the level of the tax rate. PROPERTY TAX: A tax levied on any kind of property. PROPERTY TAX REFUND: A partial property tax refund program for those who have property taxes out of proportion with their income. This program is available to homeowners and renters. SALES RATIO STUDY: A study conducted by the Department of Revenue of open market property sales, which is then compared to local assessments to ensure that local assessments adequately reflect the market. STATE GENERAL PROPERTY TAX: A state-imposed property tax on commercial, industrial, and seasonal recreational properties. STATE SALES TAX: A state tax (6.5%) levied on the sale of goods and services that is deposited into the state general fund. TAX CAPACITY: The valuation of property based on market value and class rates, on which property taxes are determined.