City of Hopkins - Public Hearing for the 2006 Levy and Budget
CITY OF HOPKINS
PUBLIC HEARING
FOR THE
2006 LEVY AND BUDGET
December 5, 2005
6:30 PM
City Council Chambers
Power Point Slides
Prepared by: Christine Harkess, Finance Director
Public Hearing for the
2006 Levy and Budget
December 5,2005
1
How Your City and County Property
Taxes Are Determined
Box 1
Total
Proposed Local
Budget
Assessor's
Market Value
..minus
x times
All Non-Property
Tax Revenue
IE: State Aids
Fees. Irterest Income
State
Mandated
Class Rates
= equals
= equals
'~""-'NBox~6"'~"--""
Property tax
Revenue Needed
(Levy)
Total
"Tax Capacity"
divided by
(fonnerly.Assessed
Value)
= equals
................B~xui.
Property
Tax Rate
("Tax Capacity Rate")
City has NO control over ----
Assessor's Market Value - County If you disagree with the assessed
value - Board of Review, talk to assessor for an appointment if you want your
property evaluated
State Mandated Class Rates - State
The two of these determine the tax capacity of a particular piece of property
City has control over the left side of the flowchart.
Focus of the TNT discussion is on BOX 3 - Property Tax Levy
2
Taxation Process
. Preliminary Levy
. Truth in Taxation notices
. Public hearing for final proposed levy
and general fund budget.
. Continuation hearing set for Tuesday,
December 20th (if needed).
Council adopts a preliminary levy in September for the truth and taxation
notices sent out in November. This levy cannot be increased but it can go
down.
Tonight is the public hearing for discussion of the proposed budget and levy
with the public.
If after the public hearing there are still issues to be resolved the council can
hold a continuation hearing on Tuesday Dec. 20th, prior to the final adoption of
the 2006 budget and levy.
3
Legislative Impacts
.2003 lost state aids $731,000
(8.50/0 of 2003 budget)
.2004 lost state aids $1,100,000
. The legislature continues to review
the formula for LGA allocations
In 2003 and 2004 the legislature voted to cut local government aids in an effort
to reduce state spending. Hopkins lost a total of $1,800,000 in revenues over
two years. Hopkins currently receives $50,000 in LGA which is allocated to
the Hopkins Center for the Arts. We continue to monitor the legislative
progress on LGA issues.
4
2006 Proposed Tax Lev
2006 2006
Net Levy Net Levy
Purpose 2004 2005 Proposed Revised
General Operations
General Fund $5.654,321 $7,261,263 $7,261,263 $7,164,263
Other Levies:
PERA Le;y 511.815 $11,815 $11,815 $11.815
Capital Le;y $0 $25,000 $25,000 $25,000
HRA Le;y $0 $10,000 $20,000 $20,000
Total General Levy $6,666,136 $7,308,078 $7,318,078 $7,221,078
Special Levies:
GO Bonds $210,000 $190,000 $180,000 $180,000
ImprOl.ement Bonds $150,000 $147,000 $147,000 $147,000
HRA Revenue Bonds $678,000 $475,000 $970,000 $890,000
Subtotal - Special Levies $1,038,000 $812,000 $1,297,000 $1,217,000
TOTAL LEVIES $7,704,136 $8,120,078 $8,615,078 $8,438,078
Increase over prior year $535,884 $415,942 $495,000 $318,000
Percentage Incr (Deer) - Total 7.48% 5.40% 6.10%1 3.92%1
Tax Capacity Rate 56.664% 48.944% 49.387% 48.254%
Percentage IncrlDecr in Tax Capacity Rate 1.007% -13.624% 0.905% -1.410%
At the September 6th Council Meeting the preliminary levy was set at
$8,615,078. This represented a 6.1 % increase in the levy. Upon further
review by council and staff the levy was reduced by $177,000 to $8,438,078
resulting in a 3.92% increase.
5
2006 Proposed General Fund Budget and
2006 Revised Levy
General Fund
$8,888,288
This is an decrease
from the 2005
budget of 0.380/0.
2006 Levy - Revised
$8,438,078
This is an increase
over the current
year's levy of
$318,000 or 3.92%)
and a decrease from
the preliminary
certified levy of
$177,000.
The increase in the tax levy is the lowest since before 2000.
6
Proposed General Fund Budget
$8,888,288
· 0.380/0 decrease over 2005 budget
· Revenues remain stable
· Transfer for facility bonds eliminated
· Freed up transfer funds used to absorb
expenditure increases
7
Market Values
$800,QOO,000 l
$700,000,000 j--'-~-'--
$600,000,000
$500,000,000
$400,000,000
.-.
$300,000,000 ,
$200,000,000 L
$100,000,000 L_.
I
$0 1---.-~.------'---~---'------------r- ~...------,----.-------.----.
1997
2001
2005
2002
2003
2004
1998
1999
2000
I -.-Residential _Apartment .......CII i
This chart illustrates that residential property values are rising faster than other
property classifications.
15
Tax Capacity Comparison
$8,000,000 I
$6,000,000
$7,000,000
$6,000,000
$4,000,000
$3,000,000
,
$2,000,000-1-----
1997
1998
1999
2000
2001
2002
2003
2004
2005
__ Residential
h-^Apartment
",*"C/I
This graph shows the state mandated changes in classification of property and
its affect on how the various classes of property are taxes. As you can see,
residential property is picking up a larger part of the tax burden.
16
Current Levy Proposal
. Reduced levy by $177,000
. Increase in city taxes on a median
valued home now becomes an
estimated decrease of 1.30/0.
. Taxes on a median valued home now
decrease by approximately $12
17
Analysis of Median Valued Home
.2006 Median Valued home = $218,000
. Assuming constant values
. 2005 City Taxes $891
. 2006 Proposed City Taxes $900
. Increase of $9 over 2005
. 2006 Revised City Taxes $879
. Decrease of $12 from 2005
18
Property Tax Breakdown
on Median Valued Home
of $218,000
$ 879
$ 848
$ 805
$ 189
$2,721
. City
. County
. School District
. Special Districts
Total Taxes
This includes the proposed
reduction in the city levy.
The $879 paid in city taxes is returned to taxpayers through services received
from the city.
Police & Fire protection
Street maintenance
Snow plowing
Recreation programs
Park system
Building inspections
Economic development
Municipal parking facilities
19
Where My Taxes Go
7%
31%
32%
City share of the tax pie is 32%
lEI Schools
lEI City
. County
III!Il Special
Districts
20
Tax Rate Comparison
. Current city tax rate = 48.9440/0
. TNT 2006 proposed tax = 49.3870/0
.2006 revised tax rate = 48.4140/0
(Decrease over proposed 2006 rate
and the current rate)
21
Property Tax Levy Changes
Overall Increase in levy
$318,000
. Decreased General levy $87,000
. Increased Debt Service levy $405,000
22
Compare the Value
$-
Wireless Gas Service Electric
Phone Service
Service
Cable TV
Service
Phone Water Supply Trash City Services
Service Collection
City Services (Taxes) - what you get:
Police & Fire protection
Street maintenance
Snow plowing
Recreation programs
Park system
Building inspections
Economic development
Municipal parking facilities
23
How much will we pay?
. $73 a month in property taxes for
city services.
. $1- $2 a month in franchise fees.
. $18 a month in refuse & recycling
charges
. $28 for water distribution and
collection charges.
24
What do we get?
. Clean Water
. Efficient Sewage and Garbage Disposal
. 24 Hour Police and Fire Protection
. Well Maintained Streets and Sidewalks
. Snow Plowing
. Beautiful Parks
. Quality Recreation programs
. Activity Center
. Economic Development
. Building Inspections (code & fire issues)
. Election process
25
Expenditure Budget
2005 2005 2006 Budget %
General Fund Budget Est Actua I Budget I ncr/(Decr)
City Council S 97,313 $ 87,508 $ 97,327 0.01%
Administrati\€ Services S 392,088 $ 307,819 $ 387,665 -1.13%
Finance $ 156,828 $ 144,267 $ 156,583 -0.16%
Legal $ 136,480 $ 112,274 $ 126,600 -7.24%
Municipal Building $ 123,826 $ 108,630 $ 173,293 39.95%
Activity Center $ 276,719 $ 252,318 $ 293,721 6.14%
Receptionist $ 45,754 $ 43,727 $ 45,733 -0.05%
Assessing $ 151,475 $ 147,694 $ 151,231 -0.16%
Inspections $ 527,616 $ 480,572 $ 530,375 0.52%
City Clerk $ 48,760 $ 45,323 $ 62,844 28.88%
Elections $ 22,502 $ 19,666 $ 35,376 57.21%
Police $ 3,584,766 $ 3,571,327 $ 3,794,863 5.86%
Fire $ 616,069 $ 607,021 $ 656,047 6.49%
Emergency Preparedness $ 5,110 $ 6,960 $ 5,290 3.52%
Public Works $ 1,875,702 $ 1,677,696 $ 1,876,853 0.06%
Recreation $ 204,685 $ 200,954 $ 212,505 3.82%
Planning & Zoning $ 89,071 $ 76,593 $ 95,659 7.40%
Other Financing Uses $ 567,000 $ 531,103 $ 186,323 -67.14%
IGrand Total Expenditures $ 8,921,764 $ 8,421,452 $ 8,888,288 -0.38%1
Significant changes from 2005 are:
1. Municipal Bldg - added one employee mid-year in 2005; increased
heating costs, electricity, and custodial services. Capital items include a
manlift and installation of dual gas valves on two boilers per new code.
2. Activity Center - budgeted for custodial services, heating costs increased,
capital items include security system and installation of dual gas valves.
3. City Clerk - increase in PT salaries, supplies and software related to
digitizing records, license fees for computer programs. When available we
continue to use Tree Trust Volunteers to perform the duties ofPT personnel.
4. Elections - major election year, increased costs for election judges and
training
5. Police - main increase is due to PERA and fuel costs. Capital items
include a forensic computer purchase from grant funds and two tasers
6. Fire - Fire aid from the state increased which is a pass through as an
expense to the Relief Assn, more accurate budgeting ofPT salaries.
7. Recreation - now includes expenditures for the skate park
8. Planning & Zoning - ArcView software and training
9. Other financing Uses- Levy swap not used for 2006. Includes transfer for
Paratransit program and a contingency for union negotiations and unexpected
and unbudgeted expenditures.
8
Factors Impacting Expenditures
. Continued need for digitizing records for ease
in public access
. Election year for state and federal levels
. Capital needs for activity center, municipal
building, police, fire, and public works
departments
. Union contracts
. Expenditure factors beyond our control such
as - property & liability insurance, fuel, heating
and electrical costs
9
Revenue Budget
2005 2005 2006 %
General Fund Budget Est Actual Budget Incr/(Decr)
Property Taxes $ 6,423,919 $ 6,478,099 $ 6,312,098 -1.74%
Intergovernmental Re\€nue $ 1,228,669 $ 1,212,624 $ 1,310,890 6.69%
Licenses, Perrnits & Fees $ 627,975 $ 551,316 $ 639,400 1.82%
Charges for Service $ 219,350 $ 175,700 $ 200,750 -8.48%
Miscellaneous Re\€nue $ 311,851 $ 303,700 $ 315,150 1.06%
Interest Earnings $ 110,000 $ 95,000 $ 110,000 0.00%
ITotal Revenues $ 8,921,764 $ 8,816,439 $ 8,888,288 -0.38%1
Factors impacting revenue budget for 2006 include -
1. Taxes - remain stable. 2005 fiscal disparities budget was estimated. 2006
amount is known.
2. Increased aid for police and fire relief associations, forensic computer
grant
3. Charges for Service - budgeting more accurately reflects actual
collections
10
General Fund - Sources of Revenue
19 1~ 2~ ~ ~ ~ ~ ~
11
General Fund Revenue Changes
. Overall decrease in General Fund
levy of $76,821
. Intergovernmental revenue increase
of $82,221
. Other revenue sources showed minor
changes
City continues to explore alternative
revenue sources to keep tax
increases to a minimum.
Levy decrease is due to the difference in amounts budgeted for fiscal
disparities. The 2005 budgeted amount was an estimate which ended up being
lower than the amount actually received. For the 2006 budget we have the
actual amount we will receive.
Intergovernmental - increase in police and fire aid.
12
Proposed Property Tax Notices
. Market Value increases of approximately
150/0 on residential property
. Median valued home went from a value
of $187,000 in 2005 to $218,000 in 2006
. City Tax increase on a median valued
home totaled 1.1 % after impact of Market
Value Homestead Credit
. City tax impact is $10 annually on a
median valued home
The increase in the proposed 2006 levy that is shown on the TNT statements is
attributed to four factors.
1. The levy increase which the council sets
2. The increase in market values
3. The phase out oflimited market value
4. And the classification rates which are set by the legislature.
The council increased the levy 6.1 %, the other factors contributed to the
increases reflected on the TNT statements. The city council has reduced the
preliminary levy by $177,000 to get to the new proposed tax levy that we are
presenting this evening.
13
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Tax Shift
Residential
Comm/lndus
Apartments
1IIIil2002
lIB 2003
o 2004
. 2005
o 2006
Because of the changes in tax classification rates and the large increase in
market values of residential properties, residential properties now pay almost
50% of the property taxes levied by the city. Three years ago they paid 35%.
Apartments now pay 17% from 22% and Comm/lndus now pays 34% down
from 43%.
14