Memo-2003 BudgetStaff Analysis of 2003 Budget
* 2003 Budget Analysis
Attached to this report is a summary of 2003 estimated general fund budget revenues and estimated
2003 general fund expenditure appropriation requests. Prior to the September 3rda' meeting, at which
time the Council will set the preliminary levy and proposed budget, most departments' will have their
requested budgets back to Finance and we will have a much mare accurate estimate.
The sununary shows historical revenues and expenditures, which allows us to analyze current and future
requests.
2001 and 2002 Legislative Actions
Levy limits have been reinstated for all counties and cities with populations over 2,500. The City of
Hopkins has always stayed under levy limits in the past and has not regarded the limits as the levy
amount. These limits are imposed to help control property tax increases. Increases are imposed for
factors such as inflation, household growth, and increases in market value due to the construction of new
commercial and industrial properties. The City's budget is designed to cover its' costs within a
reasonable levy increase. The City of Hopkins is projecting a current levy increase of 4.5°Io for
operations and 8% for debt. This amounts to a $290,000 increase in operating levy for the general fund
and $514,000 for debt service. The HRA levy is projected to increase $3,000 or 3%. The increases are
caused from normal operating increase and the facility project levy.
In Minnesota property is taxed at different rates based upon its type. In 2003, rate changes did not
occurr. Residential tax classification rates are I% for all homes with values of $500,000 or less.
Commercial and Industrial tax classification rates are 1.5% for properties valued less than $200,00
2.1%n for property above $200,000. Apartment tax classification rates are 1.8% for all non- subsidy
units. What does all this mean? Because tax classification rates stayed the same the tax capacity v
Hopkins is anticipated to increase by 8°Io or $1,000,000 for 2003. This helps keep our tax capacity
down. If Hopkins overall tax capacity goes up and the levy stays the same, the tax rate would go d
2003 Budget Options
0 and
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own.
As part of the preparation for the preliminary budget, departments are instructed to keep personnel
increases at agreed amounts per our labor agreements and to keep total expenses at or below 4.5%.
Labor agreements have not heen settled for 2003. A change in health insurance carriers for 2003 has
helped in keeping benefit increases down. Finance is projecting an overall increase in salaries and
benefits of 4.8%. Salaries and benefits compose 76% of general fund expenditures. A projected increase
in total expenditures of 6% is anticipated.
Another item that affects the overall levy is the debt service levy. This levy is to increase by $514,000 to
$856,000 for 2003. It is evident that increases in the levy amount will be needed in the future to pay for
public improvements that are taking place now and in the future. HRA lease revenue bonds will be
issued in 2002 and 2003. These bonds will pay for the facility project. PIR bands will be issued in 2002
and new bonds are projected to be issued in 2004, 2006 and 2008. These bonds are partially paid with
assessments and the other portion is paid with tax levy.
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