Memo - Budget Process - 2006
MEMORANDUM
I FINANCE DEPARTMENT I
Date: May 5, 2005
To: Mayor & City Council
From: Christine Harkess, Finance Director
Subject: 2006 Budget Process
Attached are several documents regarding the 2006 budget that will be the basis for setting the
2006 budget goals, process and procedures. We will go over each of them as we begin the
budget work for 2006.
May 5, 2005
REVIEW OF BUDGET GOALS
The City of Hopkins is in the process of establishing the 2006 budget and tax levy goals.
Following is a list of goals made for 2006 which are based on 2005 goals.
2006 BUDGET GOALS
o Maintain essential City services at current levels at an affordable price for residents and
commercial/industrial Users.
o Use program budgeting as a tool for analysis of all programs and services to:
. look for ways to reduce dependency on state aids,
. 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,
o Forecast funding needs and tax implications to assure strong long-term financial stability.
o Provide adequate funds to meet necessary technology upgrades.
o Review policy of not using fund balances for operating expenses.
o Recognize employees that help the City save money.
. Partially fund capital equipment expenditures through the equipment replacement fund.
o Pursue legislation for Food and Beverage tax or local option sales tax, review utility franchise fee and
persue street utility fee
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 continuing state deficit will affect city finances and may affect residential
and commercial based taxpayers and utility payers.
>> Several bills are making their way through legislation that may significantly impact taxes and the
truth-in-taxation process. We will continue to monitor this situation.
,.. Property Classification Changes - There has been a tendency to shift some of the tax burden
back to residential from commercial/industrial taxpayers. This is not anticipated to be a part of
the 2006 changes.
>> 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 -Is being considered 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, will be fazed out in 2004..
May 5, 2005
2006 BUDGET
Overview
Below are some variables which may impact the levy and budget in 2006.
1. The 2006 proposed general fund expenditures are undetermined.
2. The 2006 required debt levy is $1,297,000, which will totally fund the 2006 debt
requirements as set forth in the bond covenants. This includs taking $400,000 of the levy
swap from the General Fund and putting it back as debt levy.
3. The 2005 HRA levy is at $10,000. We may want to look at an increase for 2006.
4. The overall 2006 levy increase is yet to be determined.
5. There are several bills circulating at the state that may significantly impact our 2006 levy
and the results of those bills will not be known until the end of May or early June.
6. A 1% levy increase equals $81,000 of new revenues.
7. The franchise fee is still included in projected revenues at $1 per utility bill per month., or
$290,000.
8. The total general fund reserve balance is $4,071,293. It is our policy to have at least 50%
of the tax levy in fund balance reserves to cover our expenditures in the general fund from
January through June. Fifty percent of our 2005 general fund levy is $3,636,539. We are
approximately $434,000 over our goal in general fund reserves.
2005 AVERAGE HOME MARKET VALUE
$187,000
$205,000
2006 PROJECTED AVERAGE HOME MARKET VALUE
(increase from limited market value coming off and actual increase in value - up 10% est)
2005 CITY TAX ON AVERAGE HOME
$ 914
CITY OF HOPKINS
2006 BUDGET - PRELIMINARY ESTIMATES
2005 Levy and Budget 2006 Levy and Budget Difference
REVENUES REVENUES
2005 Adopted General Fund Property Tax Levy $7,273,078 2006 Estimated General Fund Property Tax Levy $6,873,078 ($400,000)
2005 Adopted Debt Service Property Tax Levy $812,000 2006 Estimated Debt Service Property Tax Levy $1,297,000 $485,000
2005 Franchise Fees $290,000 2006 Franchise Fees $290,000 $0
2005 Intergovernmental $379,510 2006 ESTIMATED Intergovernmental $390,000 $10,490
2005 Permits and Fees $627,975 2006 ESTIMATED Permits and Fees $640,000 $12,025
2005 Charges & Other Revenues $351,201 2006 ESTIMATED Charges & Other Revenues $360,000 $8,799
Total $9,733,764 Total $9,850,078 $116,314
EXPENDITUES EXPENDITUES
2005 Debt $812,000 2006 Debt $1,297,000 $485,000
2005 Salaries and benefits $6,416,183 2006 ESTIMATED Salaries and benefits $6,608,668 $192,485
2005 Materials Supplies and Services $1,709,289 2006 ESTIMATED Materials Supplies and Services $1,846,032 $136,743
2005 Capital Outlay $379,292 2006 ESTIMATED Capital Outlay $332,500 ($46,792)
2005 Transfer to Debt Service $400,000 2006 Transfer to Debt Service $0 ($400,000)
2005 Transfer to Para Transit $17,000 2006 ESTIMATEED Transfer to Para Transit $17,000 $0
Total $9,733,764 Total $10,101,201 $367,437
$0 ESTIMATED SHORTFALL ($251,123)
2005 LEVY INCREASE WAS 5.4% 2006 LEVY IS SHOWN AT 2005 LEVELS LESS THE LEVY SWAP
,..6 VROVOSED lllJDGE'f c,\LENIlM' ,
4J!t"
",oct with eoun,il to oct""-- and goal' for 2..6 budget
~
~ Distribute 2006 budget calendar.
~ D\,tributO budget _u,,) \n"""tion, ",d Form A - 1"',\tion ,,)\OCation f""""
F '"' A to Fin"''' ""vi" ",ade on'! .dditi"",I<I<\etion"'adiU'unents to alloc"""""
~
Del1artnlents return 0
~ ReV'eW by F,..n" j)\reetOr with D"'_ts ",d City ""'- for 1"""une\ ,hang'"
~ Notify VUb1\' work< D're"'" of the (Jarage-L'bof & ]3ufUen budget _ont
D"tribut< ReV- ,nd B>q>endi- <l<tal\ budgets for revieW, update<' and ,hang'" (On ""'" dire'toty nude<
~
2006 budgets)
AU budget r~ for the foUowing ~"'ts ",d fun<\' mu" be ",,,,,"tted to the Fin"''' D,,,,,tor Q!l2!
before the dates indicated below:
~ Mayor-Council Legal
Administrative Services Finance
Planning ReceI>tiOn
Elections Assessing
Insl1ections City Clerk
police Fire/Emergency prel1aredness
Recreation Activity Center
VUb1\' Work<,nd Pot'" eXCept En",,",," Fund'.
~
,67
(continued)
1006 PROORA>' BUoGE'f CALENDAR,
RevieW ca~ita1 outlay requests
. Art eenw """",tio'" fund
l'aratrans1t Water Utility fund
Cab" TV sani"'" SeWer UtilitY fund
Depot Coffee i:louse f d Refuse Utility fund
Equi~1l1ent Replace1l1ent un Stor1l1 Sewer Utility ~und
pavilionflC' puen' fund Uous"" R,1>abilitaUOU fund
Economic Develop1l1ent Tlf Districts
Section 8
l'arking
~
further analysis.
D'I"'""""" "''' "",tin.s wi1h nn""" ""d City """,.er fo<
in M""aoe""'" _tin. with~" ond C,ty M-
"""Iy>'is ""d ",serob'Y ofbudget ,eques" by finan" ~
Finance analysis and asse1l1b1y
~
~
and leV)'
R,gula< Julyl"''''' "",n1h ~ ~,int?,," ready.
Ci' Co"",iI _ _k session - discuSS f""1"""",,, bUd.,t
- - . '--
eomr"\.tiou ond f"'ntin. of f""1i""""" bUdgot d~
b,Ul!Ust.2.
1S\
Sept.
~ 2
~ Propoond 1006 budg,t and \C'<Y f""""'anion to Council
~ PrOf'''' notice of ~ub\iC hearing fo' n'w""""" 'fhu'S
,,<>ust 3 \ post 1'!OP"scd 1006 bud.et ""d l"'"i on the 'II '0
168
\
2006 YROGRAM ,,\JDG!l1 Ch\-!lND,'.R, (,on\inU<d) ,
! Y nd dc1>,.uneol ,otal' only) mal sol" · """li' """"'
~ C' ~ adoP'" ",0""""" IeV'} and bodr,:, (';,::. : neo<Jed Ii"",.nd pl.", no<<! to be annou".,.d "n'"
date f'" D""",be< \2th. lfa oootinuat'on 0 e ",ding the "'~o<! loorem" in tb< "'" ",e.
to adio""'-' of"", "",,,",g. J'Ubh' 1I<",Og <eg . 0'
. . Ie b 9,15,05 to eouoW Auditor. (FmaI 1M ,ann
~ elw """,I ,ertifY . "",,,,,,,,,,, bud got and "",h""""" "'" ,y y
"",o<! "",lunIDarY leV'})' . C ble mal
. d' I",.lioo f;nance, Legal, co-""W 5<<"''''' ·
~ c: w eoun'" budget "",k s""on - Coon.,,!, 1\ ono '
; ui ",enl R<P"'''''''''' f>to<I- (,",,01 f"'lO staff). .
, p . . Y"'_ mal Cbe""'''' J\SS"_ot - (inJ'O' fro'"
. l' r e flre RecreatlOn,
~ ~ bodgot ".,de ",,,00 - 0'" ,
staff).
. 11 e in CoU11t)' regarding ta1t rate
~ "oue< frO'" eon p .' & eorornonlW D",eIOP"""" Y"" 1<OU"t, Housing
. b d t ".,de ",,100 - Ylanom", !loo"o'"
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'1 b d t work sesS10n - u lC '
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Center, Dtl11ty fU11ds, a'/llon
~ 1'rel1are Budget Document
. . o,embe< I If f'" . fo",," 00 "",,_1Stlc
~ ",opare public fo",," oolift,""oO ad,e"",m., post on"
~ ",,,ent bodge' 10 ooonci1- fu<a\ dop_t InIlut
169
2006 PRoG~ BlJDGEf C;,LmwAR. \_linuod) ,
. . . . o,_taI enlili" 'licit ",,,,,,,,,,d bud.,,,, ''''',''
>'0,.10-21 Co""ty ,nail' uoli'" ,~ ,,,,,,'1'" ",&ca- fo< ~\_";:fi~ in oo>1'1'li"''' with trUth in _tlon uo"'".
~ aad _ of public ",ann"'. 'fh' non'" a" P"'" '
(1:' nt and future fUlancing.
~ public F- nolif"alion fo< bud<" inj>u' ,,"" "" """
.. f City 1-<\>".",," ",,,, J""l"''''" bud"" '" the City council.
~ 1>ublic forum and sub11\1SS10n 0
~ Cit)/ council budget work session -
. f 1> bY flearing on 2006 Budget.
~ l't<I"'" ollicial non" 0 u" .
than ,\J< daYS nor '''' th'" ,.,0 daYS pno< '"
~ publi" ollic"" noli" of public 1I""in' on 2006 Bud.... no' lUO"
l'ublic bearing date.
.red '" be beld"""""'" NO''- 29 aad
~ City Co""cil public 11"""'" on 1IJ06 bud"" a,6,)O F1'A ~:;:;" n~ - Co""cil -' anno""" a
D<"- 20, 20(5). If coulinualion of publiC ~~ """ Co"",iI w:,uld """,der ""olulion adoPU""
sub""u,,", _in., <,,,,nO _, ':\ ~~ at; a ~nuati';' " "","od, - dat<, time ",d plaC' -' be
tho 2006 Bud." aad -' the '"" . ,..
""",unccd ",ior '0 udiourrun"" of tin' fir" -"''' . .
. . 6.30"'" if naad'd. ^' tho ,nd of ,bi' c_uanon
~ City council _ conlinuatlon of Bud." """liC U""",, . . 'Iin' dot< - aad pia'" at ",bicb beann< Co""'"
. subse<\uent beatlng, gl '
."'""" the Co"",rl ron" ann~un", a th 2006 budge' aad "'W< the uual 2006 levY
would consider a resolut10n a Ol'tUlg e
~ City Co"",iI _ If a continuation ."""'. ",,,, or ",,,, no' n'"'''''''' adop' Bud"" and L'''!
Final "uatication of tho 2006 Io'Y '" the Co""ty bUOi,or by ,h' City Clerk.
~
no