City of Hopkins - Review of Budget Goals
,
. May 28, 2002
REVIEW OF BUDGET GOALS
The City of Hopkins is in the process of establishing the year 2003 budget and tax levy goals. To
begin with lets look at the 2002 goals and review the progress.
Following is a list of goals made for 2002.
2002 BUDGET GOALS (could use the same goals for 2003 or revise them)
. Maintain quality City services at current levels at an affordable price for residents and
commercial/industrial users.
. Continue implementing program budgeting to use as a tool for analysis of all programs and services to:
. look for ways to reduce dependency on the property tax,
. find greater efficiencies in the provision of current services and programs,
. compare staffing levels to workloads to assure proper allocation of resources,
. create greater linkages between revenues and expenses, to allow for more entrepreneurial
approaches to non-essential services.
. Forecast funding needs and tax implications to assure strong long-term financial stability.
. Provide adequate funds to meet necessary technology upgrades.
. Continue policy of not using fund balances for operating expenses.
. Recognize and award employees that help the City save money.
. Continue to fully fund capital equipment expenditures through the equipment replacement fund.
. Continue with the Citizen's Academy to involve citizens in local government through training and
. education.
. Adoption and commencement of Hopkins Mission Statement and Vision action steps.
. Pursue legislation for Food and Beverage tax and collect information on potential utility franchise fees.
BUDGET CONSIDERATIONS
There are areas to consider that may affect the budget during the next few years.
State Tax Reform:
)> The legislative fix for the two billion dollar deficit may affect city finances as well as residential and
commercial based taxpayers.
~ Property Classification Changes - There has been a tendency to shift some of the tax burden back to
residential from commercial/industrial taxpayers. This will continue in the future for apartments and
duplexes but it is predicted to discontinue for commercial/industrial.
)> Tax Increment Finance - Any changes in property classifications impact property tax generated by
TIF districts. Currently the tax generated in the various districts is projected to be sufficient to cover
any debt or liabilities created in the districts in the long run. However a few districts could experience
negative fund balances for short periods of time.
~ Property Tax Freeze - May be considered in the future as a tool to hold down local government
spending.
~ Assessed value limitation - Implemented in 1997 to limit the increases in a residential property value
it essentially shifts tax burdens from high increased value properties to low increased value
properties.
~ State Aid Freeze or Reduction - State aids continue to either stay the same or have been reduced in
recent years. This trend will continue into the future with State government wanting local
governments to become less reliant on aid for support.
.
- -- -- --
. We are maintaining basic city services in 2002. We allocate building maintenance expenditures and
equipment expenditures to more accurately reflect program costs. We wlll continue to work on cost
allocations for all programs and funds.
Attached is a forecast of general fund expenditures and revenues for the next five years with the
associated tax levy's to achieve those levels.
The assumptions for the forecasts made are as follows:
);> Current services will be maintained - no elimination to services. Hire all budgeted police officers
and other open positions.
>- A 5% increase in salaries and employee benefits each year respectively.
>- Approximately a 2% increase in materials, supplies and services each year respectively.
>- Approximately a 2.5% increase in chargebacks to special revenue funds, capital improvement funds
and enterprise funds. This helps reduce general fund expenditures.
);> County Rd 3 Blvd irrigation of $10,000 in 2003, general fund.
>- Regional trail connections of $5,000 in 2003, general fund.
>- Approximately a 6% increase in the gross levy for 2003 general fund operations and an 8% increase
. in the gross levy for facility debt for a total increase in levy of 14%.
>- Intergovernmental revenues stay flat each year. Unknown affects of changes in federal and state
governments.
);> Approximately a 2% increase in fines, permits and fees for 2003, with the potential redevelopment
within the city.
>- A $10,000 decrease in interest earnings for 2003 budget to accurately reflect actual earnings
potential.
>- Approximately a 2% increase in charges for services in 2003 budget to accurately reflect historical
collections.
>- Other revenues would remain relatively constant.
>- An average increase in the assessed market value of property of 8%.
One item that should be discussed is the future support for the Art Center operations and the Depot
Coffee House operations. We currently support the Depot Coffee House operations through the
general levy at approximately $20,000 a year. We fund the Art Center operations through the Cable
fund at approximately $80,000 a year.
.
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