II.5. Continued 2020 General Fund Budget & Tax Levy; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: November 26, 2019
Subject: Continued Review of 2020 General Fund Budget & Tax Levy
_____________________________________________________________________
PURPOSE
To review the 2020 General Fund Budget and Tax Levy.
INFORMATION
The levy being proposed is $17,529,684 a 9.71% increase from 2019. The levy provides
for the continuation of outstanding customer service by City workers, exceptional police
and fire protection and helps maintain a vibrant, authentic downtown.
City property taxes for a median value home ($276,000) in Hopkins are estimated to be
$1,823 or an $88 increase from 2019. The two largest areas supported by the levy are
public safety and capital projects & debt. This is a breakdown of estimated City property
taxes:
Public Safety 645$ 35.4%
General Government 261$ 14.3%
Public Works 220$ 12.1%
Parks and Recreation 172$ 9.4%
Arts Center 34$ 1.9%
Pavilion 30$ 1.6%
Capital projects & debt 461$ 25.3%
Total 1,823$ 100.0%
Finance Department
Public Safety is comprised of police, fire and inspection departments. In total they make
up 35.4% of the levy.
The Police Department makes up 28.0% of the tax levy. The Police Department’s
Mission is to serve the community with Honesty, Integrity and Respect. They
accomplish this through community engagement, relationship building and
providing education and youth initiatives. They also responded to over 26,000
calls for service in 2018. They work diligently to prevent and deter crime.
The Fire Department makes up 6.1% of the tax levy. The Fire Department’s
mission is to provide quality fire response, prevention services, emergency
medical, hazardous materials handling and emergency preparedness. In 2018,
they responded to over 1,500 calls, which is over an 8% increase over the previous
year. Their average response time is 4.2 minutes.
Inspections – this is the smallest department within public safety, making up 1.3%
of the tax levy. The Inspections Department budget is mostly funded through
charges for service. The 2020 budget includes revenues of $572,700 and
expenditures of $863,296.
Capital projects and debt is the next largest portion of the levy making up 25.3%. It
supports street reconstruction, capital projects at municipal buildings, equipment
purchases and the Burnes Park improvement project.
The City is completing a street reconstruction plan paid for through bond
issuance, special assessments and user charges for water, sewer and storm-
sewer. With this proposed levy, the City stays on schedule to complete its street
reconstruction/major rehab program, encompassing all city streets, within the
next 10-12 years. Continuing this program ensures the future preservation of our
streets and helps maintain the quality of life Hopkins residents have come to
expect.
In order to fully realize the benefits of Southwest Light Rail the city invested in 8th
Avenue and created the Artery. The Artery is a bike, pedestrian and vehicle
connection and community space between a future light rail transit station and
the City’s historic downtown. The $5.7 million project leveraged $2.6 million of
grants from Metropolitan Council, Hennepin County and Three Rivers Park
District.
The City has also invested in the Blake Road Corridor. The City is adding
several pedestrian friendly amenities including: multi-use trails, landscaped
boulevards and upgraded street lighting. The Road was also be upgraded to
handle future traffic and development demands. The $16 million project
received reimbursements from Hennepin County ($8 Million) and utilized
Municipal State Aid of ($3 million).
The City’s share of the Artery project and Blake Road reconstruction were funded
with debt. They also took advantage of limited outside funding sources in order
to make needed improvements. Had the City delayed the projects it would have
likely resulted in higher costs and a larger City-share of the overall cost.
The Arts Center levy being proposed is $325,255 or 1.9% of the total levy. Currently,
the Arts Center has a deficit balance of $1.2 million owed to the City’s General Fund
that has accrued since its opening in 1997. This levy includes $60,000 to pay back the
general fund. The remaining levy amount of $265,225 is for current operations. The
City believes that the Arts Center was an excellent economic development tool that
helped make Mainstreet vibrant and authentic. With this levy, the Arts Center will
continue to be an asset to the Community.
The Pavilion levy being proposed is $290,000 or 1.6% of the levy. In 2018, the Pavilion
was upgraded and expanded. The City needed to complete a project to replace a 27-
year old refrigeration system that was unreliable, developing leaks and being phased
out by the EPA. The City was able to leverage $1.0 Million from Hopkins School District
and $1.0 Million from Hopkins Youth Hockey Association to increase the scope of the
project to include a warming house addition, remodeled locker rooms, shower rooms,
expanded lobby, remodeled office, remodeled concession stand and expanded
restroom facilities. The final project required bond proceeds of $3.1 million from the City
to complete. The debt service for the bonds will be paid with a Pavilion levy over the
next 15 years.
FUTURE ACTION
A final levy must be adopted by December 31st of each year at or below the preliminary
levy amount. A Truth and Taxation hearing meeting will occur during the December 3rd
City Council Meeting and approval of the final levy is planned.
City of Hopkins
General Fund Revenue Budget
For the Year Ending December 31, 2020
Proposed with Reductions
November 26, 2019
Department 2019 Budget 2020 Budget
% Increase
(Decrease)
Property Taxes 11,821,624 12,564,305 6.28%
Intergovernmental Revenue
PERA Aid 20,510 -
Local Government Aid 556,619 734,946
Intergovernmental Revenue - Other 590,000 618,000
Total Intergovernmental Revenue 1,167,129 1,352,946 15.92%
Licenses, Permits & Fines
Court Fines & Penalties 176,500 177,750
Building Permits & Inspections 440,700 461,300
Inspection Fines & Citations 8,000 8,000
City Clerk - Business Licenses 7,000 7,000
PD - Liquor, Animal Licenses & Penalties 89,100 102,300
Fire - Licenses & Permits 1,100 1,100
Public Works - Licenses & Permits 19,415 19,415
Planning & Zoning - Licenses & Permits 3,500 1,000
Total Licenses, Permits & Fines 745,315 777,865 4.37%
Charges for Service
Finance Department 9,750 5,500
Assessing 3,000 3,000
Inspections 104,360 105,900
Police 25,000 35,000
Fire 10,500 10,500
Public Works 4,150 4,150
Activity Center 94,000 87,000
Total Charges for Service 250,760 251,050 0.12%
Miscellaneous Revenue
Franchise Fees 290,000 296,200
Miscellaneous 15,250 15,250
Finance Department 5,100 1,200
Police 2,000 2,000
Fire 3,500 3,500
Public Works 5,300 5,300
Activity Center 14,500 32,100
Community Development 90,000 60,000
Total Miscellaneous 425,650 415,550 -2.37%
Total Revenues 14,410,478 15,361,716 6.60%
City of Hopkins
General Fund Revenue Budget
For the Year Ending December 31, 2020
Proposed with Reductions
November 26, 2019
Department 2019 Budget 2020 Budget
% Increase
(Decrease)
City Council 96,131 97,630 1.56%
Administrative Services 797,580 854,893 7.19%
Finance 351,173 400,495 14.04%
Legal 175,000 175,000 0.00%
Municipal Building 392,396 404,014 2.96%
Assessing 226,682 221,835 -2.14%
City Clerk 183,243 237,513 29.62%
Inspections 818,588 863,296 5.46%
Police 5,609,105 5,977,982 6.58%
Fire 1,399,178 1,483,177 6.00%
Public Works 3,221,137 3,443,017 6.89%
Recreation 269,279 285,279 5.94%
Activity Center 463,416 497,843 7.43%
Planning & Zoning 217,372 222,382 2.30%
Community Development 101,498 108,160 6.56%
Tuition Reimbursement 18,700 19,200 2.67%
Contingency 50,000 50,000 0.00%
Transfer to Other Funds 20,000 20,000 0.00%
Total Expenditures 14,410,478 15,361,716 6.60%
City of Hopkins
2020 Tax Levy
Proposed with Reductions
November 26, 2019
Actual Proposed % Increase
Purpose FY2019 FY2020 (Decrease)
General Operations
General Fund 11,736,624 12,479,305 6.33%
Capital Levy 100,000 75,000 -25.00%
Arts Center 257,500 325,225 26.30%
Pavilion Fund 40,383 290,000 618.12%
Equipment Replacement 230,000 110,000 -52.17%
Total General Operations 12,364,507 13,279,530 7.40%
Debt Levy
Debt Previously Issued 3,613,429 3,844,281 6.39%
Debt Issued in 2019 - 405,873 100.00%
Total Debt Levy 3,613,429 4,250,154 17.62%
Total Levy 15,977,936 17,529,684 9.71%
A publication of the Association of Minnesota CountiesA publication of the Association of Minnesota Counties
THE MARKET VALUE OF A PROPERTY MAY CHANGE.
• Each parcel of property is assessed at least once every five years and a sales ratio study
is done to determine if the property is assessed similarly to like properties. If not, the
Commissioner of Revenue may issue an ‘order’ that would affect the taxable value of a
parcel.
• Additions and improvement made to a property generally increases its market value.
THE MARKET VALUE OF OTHER PROPERTIES IN
YOUR TAXING DISTRICT MAY CHANGE, SHIFTING
TAXES FROM ONE PROPERTY TO ANOTHER.
• If the market value of a property increases more or less than the average increase or
decrease in a taxing district, the taxes on that property will also change.
• New construction in a taxing district increases the tax base and will affect the district’s tax
rate.
THE STATE GENERAL PROPERTY TAX MAY CHANGE.
• The state legislature directly applies a State General Property Tax to commercial/industrial
and season/recreational property classes.
Fourteen Reasons
WHY PROPERTY TAXES VARY
FROM YEAR TO YEAR
A publication of the Association of Minnesota Counties
THE CITY BUDGET AND LEVY MAY CHANGE.
• Each year, cities review the needs and wants of their citizens and how to meet those needs
and wants. This is called ‘discretionary spending’ in the city budget. Also included in the
budget is non-discretionary spending which is required by state and federal mandates
and court decisions and orders.
THE TOWNSHIP BUDGET AND LEVY MAY CHANGE.
• Each March, townships set the levy and budget for the next year.
THE COUNTY BUDGET AND LEVY MAY CHANGE.
• Each year, counties review the needs and wants of their citizens and how to meet those
discretionary needs and wants. In addition, also included in the county budget is non-
discretionary spending which is required by state and federal mandates and court
decisions and orders. As much as sixty to eighty-five percent of the county expenditures
are used to deliver mandated services.
THE SCHOOL DISTRICT’S BUDGET AND LEVY MAY
CHANGE.
• The Legislature determines basic funding levels for K-12 education and mandates services
that schools must perform. On average, approximately seventy percent of school costs
are paid by the state.
• Local school districts set levies for purposes including safe school and community
education, etc.
A SPECIAL DISTRICT’S BUDGET AND LEVY MAY
CHANGE.
• Special districts such as the Metropolitan Council, hospital districts, watershed districts,
drainage districts, etc. set levies to balance their budgets.
SPECIAL ASSESSMENTS MAY BE ADDED TO YOUR
PROPERTY TAX BILL.
• Water lines, curb and gutter, and street improvements that directly benefit your property
may be funded, in whole or in part, through a special assessment that is added to your tax
bill.
A publication of the Association of Minnesota Counties
VOTERS MAY HAVE APPROVED A SCHOOL, CITY/
TOWNSHIP, COUNTY, OR SPECIAL DISTRICT
REFERENDUM.
• Local referendums may be held for local government construction projects, excess operating
levies for schools or many other purposes.
• Referendum levies may be spread on the market value or the tax capacity of a property
depending on process and type of referendum levy.
FEDERAL AND STATE MANDATES MAY HAVE CHANGED.
• Both the state and federal governments require local governments to provide certain services
and follow certain rules. These mandates often require an increase in the cost and level of
service delivery.
AID AND REVENUE FROM THE STATE AND FEDERAL
GOVERNMENTS MAY HAVE CHANGED.
• Each year the state legislature reviews and adjusts the level of funding for a variety of aids
provided to local governments including Local Government Aid and County Program Aid.
The formulas for how aid is determined and distributed among local governments may have
changed.
• While direct aid and revenue from the federal government to local governments has declined
greatly in recent years, federal revenue continues to be a key portion of the local government
revenue stream and that revenue stream may have changed.
THE STATE LEGISLATURE MAY HAVE CHANGED THE
PORTION OF THE TAX BASE PAID BY DIFFERENT
TYPES OF PROPERTIES.
• A change in class rates will require a change in the tax rate to raise the same amount of money.
OTHER STATE LAW CHANGES MAY ADJUST THE TAX
BASE.
• Fiscal disparities, personal property taxes on utility properties, limited market value, and tax
increment financing are example of laws that affect property taxes.
Revised December 2011
Association of Minnesota Counties
125 Charles Avenue
Saint Paul, MN 55103-2108
Main Line/Switchboard: 651.224.3344 Fax: 651.224.6540
www.mncounties.org
Glossary of Terms
CATEGORICAL AID: Aid given to a local unit of government to be
used only for a specific purpose.
CIRCUIT BREAKER: See “Property Tax Refund.”
CLASS RATES: The percent of market value set by state law that
establishes the property’s tax capacity subject to the property tax.
COUNTY PROGRAM AID: State property tax relief aid to counties,
distributed with a formula based on needs (households on
foodstamps, age of the population, number of serious crimes) and
tax base equalization for counties with smaller tax bases.
EDUCATION AID: The total amount of state dollars paid for K-12
education. This aid is paid to the school districts.
FISCAL DISPARITIES: A program in the Twin Cities metropolitan
area and on the iron range in which a portion of the commercial and
industrial property value of each city and township is contributed
to a tax base sharing pool. Each city and township then receives a
distribution of property value from the pool based on market value
and population in each city.
GENERAL PURPOSE AID: Aid given to units of government to be
used at their own discretion. Examples are Local Government Aid
and County Program Aid.
HIGHWAY AID: Motor fuels tax and license tab money the state
distributes to counties, cities and townships for highways and bridges.
HOMESTEAD: A residence occupied by the owner.
INDIVIDUAL INCOME TAX: A state tax on the income of residents and
non-residents with Minnesota sources of income that is deposited
into the state general fund.
LEVY: The imposition of a tax, associated with the property tax.
LEVY LIMIT: The amount a local unit of government is permitted to
levy for specific services under state law.
LIMITED MARKET VALUE: A state imposed limit on property value
increases for the purpose of calculating property taxes.
LOCAL GOVERNMENT AID (LGA): A state government revenue
sharing program for cities with low property wealth or high service
burdens that is intended to provide an alternative to the property tax.
LOCAL SALES TAX: A local tax, authorized by the state, levied on
the sale of goods and services to be used for specific purposes by
the local government.
LOCAL TAX RATE: The tax rate usually expressed as a percentage of
tax capacity, used to determine the property tax due on a property.
MARKET VALUE: An assessor’s estimate of what property would be
worth if it were sold.
MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce the
property tax paid by agricultural homesteads to the local taxing
jurisdiction.
MARKET VALUE HOMESTEAD CREDIT: The Market Value Homestead
Credit (MVHC) program was eliminated during the 2011 Special
Session for taxes payable in 2012 and beyond. The credit was
replaced with a market value exclusion. This guide describes the
(MVHC) reimbursement program. The program was designed to
provide state-paid property tax relief to owners of certain qualifying
homestead property. This program has been replaced by the Market
Value Homestead Exclusion (defined below).
MARKET VALUE HOMESTEAD EXCLUSION: The exclusion reduces
the taxable value of qualifying homesteads. Despite the decreased
taxable value, taxes will increase on most properties including
apartments and businesses and is independent of any action taken
by local governments. The exclusion provides for a portion of each
home’s market value to be excluded from its value for property tax
calculations. The amount of value excluded is directly proportional
to the MVHC the home received under the old law. In this way, each
home contributes a smaller amount to each taxing jurisdiction’s tax
base. The tax rate tends to be a little higher because of the reduced
tax base, which is why taxes increase for the other types of property.
The tax burden on any given homestead could be lesser or greater
depending upon the mix of properties in the jurisdiction and the
level of the tax rate.
PROPERTY TAX: A tax levied on any kind of property.
PROPERTY TAX REFUND: A partial property tax refund program for
those who have property taxes out of proportion with their income.
This program is available to homeowners and renters.
SALES RATIO STUDY: A study conducted by the
Department of Revenue of open market property sales, which is then
compared to local assessments to ensure that local assessments
adequately reflect the market.
STATE GENERAL PROPERTY TAX: A state-imposed property tax on
commercial, industrial, and seasonal recreational properties.
STATE SALES TAX: A state tax (6.5%) levied on the sale of goods and
services that is deposited into the state general fund.
TAX CAPACITY: The valuation of property based on market value and
class rates, on which property taxes are determined.
Review of 2020 General Fund
Budget and Tax Levy
November 26, 2019
Purpose of this Meeting
Discuss and Review the City’s Budget and how
it impacts your taxes
Discuss the City’s Tax Levy
Will NOT address individual property
valuations
Taxation Process
Valuation notices sent each March for taxes
payable the following year
This is the time to appeal valuation
Set Preliminary Levy on September 17th
Proposed Tax Notices mailed November 12th
Public Meeting for Final Levy on December 3rd
Adopt Final Levy by December 31st
2020 Preliminary Tax Statement
Total Estimated Market Value in Hopkins
increased by 10.5%
Tax Increases for Residential Property (without
improvements or classification changes)
54% -increased by less than 10%
22% -increased by 10% to 20%
24% -increased by over 20%
2020 Preliminary Tax Statement
Median Value Home ($276,000)
Total Property Taxes for all taxing authorities -
$4,419
Increase of $308 or 7.5%
City Share -$1,883
Increase of $148 or 8.5%
City Reduction to Preliminary Levy
Preliminary Levy
Passed on 9/17/19
$18,032,938
12.86% increase from 2019
Recommended Levy
Approval in December
$17,529,684
Reduced by $503,254
9.71% increase from 2019
2020 General Fund Budget
Balanced Budget
Revenues = Expenditures
$15,361,716
6.60% Increase from 2019
2020 General Fund Revenue
Budget Proposed % Increase
FY2019 FY2020 (Decrease)
Property Taxes 11,821,624 12,564,305 6.28%
Intergov't Revenue 1,167,129 1,352,946 15.92%
Licenses, Permits & Fines 745,315 777,865 4.37%
Charges for Service 250,760 251,050 0.12%
Misc. Revenue 425,650 415,550 -2.37%
Total Revenue 14,410,478 15,361,716 6.60%
2020 General Fund Expenditures
Budget Proposed % Increase
FY2019 FY2020 (Decrease)
Public Safety 7,826,871 8,324,455 6.36%
General Government 2,629,775 2,811,122 6.90%
Public Works 2,168,805 2,320,948 7.02%
Parks and Recreation 1,785,027 1,905,191 6.73%
14,410,478 15,361,716 6.60%
Arts Center
$325,255 Levy in 2020
$60,000 to pay back deficit owed to General Fund
$265,225 for Current Operations
1.9% of total levy
Pavilion Levy
$290,000 Levy in 2020
Pavilion Upgrade and Expansion Project
Needed to replace a 27 year old refrigeration system
Additional amenities added with help from Hopkins
Youth Hockey and Hopkins School District
Will continue over next 15 years
1.6% of total levy
Proposed 2020 Levy
Actual Proposed % Increase
Purpose FY2019 FY2020 (Decrease)
General Operations
General Fund 11,736,624 12,479,305 6.33%
Capital Levy 100,000 75,000 -25.00%
Arts Center 257,500 325,225 26.30%
Pavilion Fund 40,383 290,000 618.12%
Equipment Replacement 230,000 110,000 -52.17%
Total General Operations 12,364,507 13,279,530 7.40%
Proposed 2020 Levy
2019 Street Project (Cambridge/Oxford)
City Hall –also funded through Franchise Fees
City portions of Blake Road
City portions of Southwest Light Rail
Actual Proposed % Increase
Purpose FY2019 FY2020 (Decrease)
Debt Levy
Debt Previously Issued 3,613,429 3,844,281 6.39%
Debt Issued in 2019 - 405,873 100.00%
Total Debt Levy 3,613,429 4,250,154 17.62%
2020 Proposed Levy
Median Value Home ($276,000)
City Taxes -$1,823
Increase of $88 or 5.1%
Next Steps
Public Meeting for Final Budget & Levy on
December 3rd
Approve Final Budget & Tax Levy on
December 3rd or 17th