Finanical Management Plan; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: June 11, 2019
Subject: Financial Management Plan
_____________________________________________________________________
PURPOSE
The presentation will be broken down into two parts. The first part is informational. It
will describe our Financial Management Plan (FMP) and how it has been used. The
second portion will review the FMP in the context of the 2020 tax levy. We are seeking
guidance and input for the 2020 tax levy.
INFORMATION
Financial Management Plan
Traditionally cities have taken a short term view for financing city operations. The one
year budget is still the norm for most cities. Hopkins began to use long term planning
for large expenditures such as construction projects and large pieces of equipment in
the 1980s. One year operating budgets were used by the City through 2014.
Beginning with the 2015 Budget, the City decided to take a long term view of financing
its operations through the use of a Financial Management Plan (FMP). The FMP is a
multi-year fiscal plan for all tax-supported funds. It integrates existing debt, Capital
Improvement Plans, Equipment Replacement Plans, future debt, tax base growth and
future operating expenses. The FMP is used to level out expenditures and bond costs
to smooth tax increases, ensure funding is available to carry out the City’s vision and as
a tool to better understand effects of budget decisions.
Finance Department
2020 Tax Levy
Based on available information, the preliminary tax levy for 2020 is $17,730,918. This
represents a 10.97% increase from the 2019 levy. The levy includes amounts for
general fund, capital improvements, Arts Center, Pavilion and equipment replacement.
Debt being paid with tax levy has been issued for street improvements, City Hall and
utility improvements related to SWLRT.
The major considerations used to prepare the 2020 FMP are:
• Local Government Aid increases $178,727
• Salary & benefit increases
o 3% cost of living (in all contracts)
o Step advances
• Equipment charges to the general fund increase by 9%
• All other expenditures increase by 3%
• Arts Center levy increases to $400,000
o $265,000 to sustain operations
o $135,000 to pay off deficit
• Pavilion levy increases to $300,000
o Debt payments for 2018 project
During the fall of 2018 the FMP was reviewed internally. The original requests totaled
12 new full time employees from 2020 to 2023. The requests were pared down to 5.5
full time employees over the same time period. The additions were presented at the
January 11th Goal Setting Retreat. Additions for 2020 are as follows:
• DWI Officer for last three months of 2020
o Grant is secured through September 30th 2020
• $25,000 for I.T. needs
• $40,000 for elections and presidential primaries
• Additional $30,000 of contingency
o $80,000 total
o 0.52% of General Fund expenditures
Taxes for a median value home are projected to increase by $215.
FUTURE ACTION
Further budget CIP and ERP discussions are planned at the July 23rd and August 13th
work sessions. The preliminary levy is planned to be approved at the September 17th
City Council Meeting. It must be adopted by September 30th of each year. A Truth and
Taxation hearing will be held during the December 3rd City Council Meeting and
approval of the final levy is planned at that time. It must be adopted by December 31st
of each year at or below the preliminary amount set in September.
City of Hopkins
Financial Management Plan Update
Executive Summary
June 11, 2019
\\LISA\share\FINANCE\FMP\2020 FMP\2019 FMP V3 - June 11 Work Session.xls
2019 2020 2021 2022 2023
Tax Levy Final Projected
General Fund 11,736,624 12,314,285 13,128,709 13,731,515 14,358,963.28
Capital Improvements 100,000 75,000 75,000 75,000 75,000
Arts Center 257,500 400,000 700,000 1,000,000 1,000,000
Pavilion 40,383 300,000 300,000 300,000 450,000
Debt Service 3,613,429 4,267,274 4,572,819 4,679,815 4,007,560
Equipment Fund 230,000 250,000 250,000 250,000 250,000
Total City Levy 15,977,936 17,606,559 19,026,528 20,036,330 20,141,524
% Increase 12.35%10.19%8.07%5.31%0.53%
Additions from January 11th Goal Setting
New Employees - Positions Added
DWI Officer - 3 Months in 2019 - 29,359 122,662 129,610 133,857
Temporary Inspector - - 41,515 42,761 44,043
Community Engagement - 0.5 FTE - - 48,493 52,857 53,357
Police Officer - - - 123,783 127,855
Fire Fighter - - - - 97,975
I.T. Tech - - - 93,114 98,372
Fire Fighter - - - - 97,975
One Time Expenditures
Community Engagement Programming - - 15,000 15,450 15,941
I.T.- 25,000 40,000 60,000 63,000
Elections - presidential primary, etc.- 40,000 10,000 41,200 10,300
Additional contingency - 30,000 40,000 50,000 75,000
Levy Required - 124,359 317,670 608,775 817,675
Total City Levy w/ Additions 15,977,936 17,730,918 19,344,198 20,645,105 20,959,199
% Increase 12.35%10.97%9.10%6.73%1.52%
2019 2020 2021 2022 2023
Final Projected
General Fund 1,274 1,353 1,437 1,501 1,561
Capital Improvements 11 8 8 8 8
Arts Center 28 44 77 109 109
Pavilion 4 33 33 33 49
Debt Service 392 469 501 512 436
Equipment Fund 25 27 27 27 27
Total City Levy per Home 1,735 1,935 2,083 2,191 2,190
$ Increase 226 200 148 108 (1)
Additions from January 11th Goal Setting
New Employees - Positions Added
DWI Officer - 3 Months in 2019 - 4 15 16 17
Temporary Inspector - - 5 5 5
Community Engagement - 0.5 FTE - - 6 7 7
Police Officer - - - 15 16
Fire Fighter - - - - 12
I.T. Tech - - - 12 12
Fire Fighter - - - - 12
One Time Expenditures
Community Engagement Programming - - 2 2 2
I.T.- 3 5 7 8
Elections - presidential primary, etc.- 5 1 5 1
Additional contingency - 4 5 6 9
Additional Levy per Home - 15 39 75 101
Total Tax Levy per Home 1,735 1,950 2,122 2,266 2,291
$ Increase 226 215 172 144 25
Taxes for Median Value Home
5 year average = $136
5 year average = $156
Financial Management Plan
Council Work Session
June 11th, 2019
What is it?
Long range fiscal plan for tax supported funds
Levels expenditures and bond costs
Ensures money is available to fund road
construction, capital equipment and maintenance
of City owned facilities
Better understanding of effects of budget
decisions
What is it?
Implemented with the 2015 Budget
Goal to increase taxes in predictable manner
Has been updated annually
What is it?
2015 Plan addressed
two specific issues
Arts Center–
supplemental funding
from tax levy instead of
Economic Development
Fund
Pavilion –aging
infrastructure in need of
replacement
What is included?
Funds included:
General Fund
Arts Center
Capital Improvement (city buildings)
Permanent Improvement Revolving (streets)
Equipment Replacement
Debt Service funds
Pavilion
What is included?
Projected costs included:
Future operating expenditures
Existing and future debt payments
Capital Improvement Plan
Equipment Replacement Plan
What is included?
Tax projections for:
Existing tax capacity
Estimates for
Market growth
New redevelopment
Decertified TIF districts
How well does it work?
2019 Proposed Levy –presented 9/11/2018
$16,042,936 Total Tax Levy
Tax Increase of $203 for Median Value Home
How well does it work?
2019 Final
$15,977,936 Total Tax Levy
Reduced debt and equipment replacement levies
Tax increase of $226 for Median Value Home
$243,000 for 2018 Taxes
$261,000 for 2019 Taxes
How well does it work?
Many different reasons property taxes change
from year to year
A tool to help put budget decision in context
of taxpayers
2020 Tax Levy
Began review of 2020 tax levy in Fall of 2018
Received requests for 12 new employees
between 2020 and 2023
Pared down to 5.5 employees over same time
period
Presented at January 11th Goal Setting Retreat
2020 Tax Levy
Additional items included over 2019 Budget
DWI Officer for last three months of 2020
Grant is secured through September 30th, 2020
$25,000 for IT needs
$40,000 for elections/presidential primaries
Additional $30,000 of contingency
$80,000 total
0.52% of General Fund Expenditures
2020 Tax Levy
Assumptions for 2020
Salary & Benefit Increases
3% Cost of Living (in all contracts)
Step Advances
Equipment charges to general fund increase by 9%
All other expenditures increase by 3%
2020 Tax Levy
Additional Revenue in 2020
Local Government Aid increased by $178,727
2020 Tax Levy
Arts Center levy increases to $400,000
$265,000 to sustain operations
$135,000 to pay off deficit
Arts Center levy part of original FMP
Projected to eliminate deficit by 2024
2020 Budget and Tax Levy
Pavilion Fund
Renovation completed as
planned in 2015 FMP
Will begin to levy
$300,000 to pay debt
2020 Tax Levy
City Hall Project
Franchise Fees of
$360,000
Tax levy of $45,000
2020 FMP w/ no additions
2019 2020
Tax Levy Final Projected
General Fund 11,736,624 12,314,285
Capital Improvements 100,000 75,000
Arts Center 257,500 400,000
Pavilion 40,383 300,000
Debt Service 3,613,429 4,267,274
Equipment Fund 230,000 250,000
Total City Levy 15,977,936 17,606,559
% Increase 12.35%10.19%
2020 FMP w/ no additions
2019 2020
Final Projected
General Fund 1,274 1,353
Capital Improvements 11 8
Arts Center 28 44
Pavilion 4 33
Debt Service 392 469
Equipment Fund 25 27
Total City Levy per Home 1,735 1,935
$ Increase 226 200
Taxes for Median Value Home
2020 FMP w/ additions
2019 2020
Tax Levy Final Projected
Additions from January 11th Goal Setting
New Employees - Positions Added
DWI Officer - 3 Months in 2019 - 29,359
I.T.- 25,000
Elections - presidential primary, etc.- 40,000
Additional contingency - 30,000
Levy Required - 124,359
Total City Levy w/ Additions 15,977,936 17,730,918
% Increase 12.35%10.97%
2020 FMP w/ additions
2019 2020
Final Projected
Additions from January 11th Goal Setting
New Employees - Positions Added
DWI Officer - 3 Months in 2019 - 4
I.T.- 3
Elections - presidential primary, etc.- 5
Additional contingency - 4
Additional Levy per Home - 15
Total Tax Levy per Home 1,735 1,950
$ Increase 226 215
Taxes for Median Value Home
Next Steps
CIP & ERP requests and updates received by
Finance Department on May 31st
Results presented at July 23rd Work Session
Operating Budget request due on June 14th
Results presented at July 23rd Work Session
Follow up discussion at August 13th Work
Session
Next Steps
Approve Preliminary Levy at September 17th
City Council Meeting
Truth in Taxation Hearing and approval of
Final Levy at December 3rd City Council
Meeting
Approval can be moved to December 17th if
necessary