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2022 General Fund Budget and Tax Levy; Bishop CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: July 13, 2021 Subject: 2022 General Fund Budget and Tax Levy _____________________________________________________________________ PURPOSE To provide input and guidance for the 2022 General Fund budget and Tax Levy INFORMATION 2022 General Fund Budget Staff has been working to put together a 2022 General Fund Budget that meets the needs of the community and the services they have come to expect. The budget being presented restores previous reductions made for crack sealing, tree re-planting and pole painting. The General Fund budget is balanced. Revenues and expenditures are both set at $16,210,954, a $460,116 or 2.92% increase from 2021. The general fund tax levy needed to support this budget is $13,283,468, a $474,916 or 3.71% increase from 2021. 2022 Tax Levy The 2022 Tax Levy has been prepared based on debt service needs, prior year ERP/CIP documents and initial budgets for special revenue funds. The levy being presented restores reductions made for Burnes Park debt service, capital improvements and equipment. The total tax levy is $18,436,103, this is a $647,719 or 3.64% increase from 2021. Based on preliminary tax capacity information, a median value home increased from $291,000 in 2021 to $315,000 in 2022. The levy and the value increase bring the city tax increase on a median value home to $158 or $2,012. Finance Department American Rescue Plan Act The American Rescue Plan Act will provide needed relief to state, local and Tribal governments through Coronavirus State and Local Fiscal Recovery Funds. Eligible uses of the funds are: • Support public health expenditures • Address negative economic impacts caused by the public health emergency • Replace lost public sector revenue • Provide premium pay for essential workers • Invest in water, sewer and broadband infrastructure The funds must be used for costs incurred through December 31, 2024. The City is projecting that it will receive approximately $1.94 million. Funds will be received in two payments in 2021 and 2022. Staff is currently recommending using the funds to address revenue loss caused by COVID-19. The City has approximately $1.3 million in eligible revenue losses from 2020 and can utilize the funds for losses in 2021-2024. Additional revenue loss is expected. FUTURE ACTION A budget engagement session will be held on August 16 from 6-7:00. Interested parties will be able to participate virtually or in person at City Hall. Details will be posted on the City’s website: https://www.hopkinsmn.com/466/City-Budget-Process. A preliminary levy must be adopted by September 30th of each year. The preliminary levy is planned to be approved at the September 21st City Council Meeting. The preliminary levy will be the maximum allowable amount for 2022 and can only be reduced. A final levy must be adopted by December 31st of each year at or below the preliminary levy amount. A Truth and Taxation hearing is planned for Monday, December 6th. The final levy can be approved on December 7th or 21st. City of Hopkins DRAFT General Fund Revenue Budget For the Year Ending December 31, 2022 DRAFT July 13, 2021 Department 2021 Budget 2021 Budget % Increase (Decrease) Property Taxes 12,893,552 13,368,468 3.68% Intergovernmental Revenue Local Government Aid 853,671 853,671 Intergovernmental Revenue - Other 621,000 622,000 Total Intergovernmental Revenue 1,474,671 1,475,671 0.07% Licenses, Permits & Fines Court Fines & Penalties 176,000 176,000 Building Permits & Inspections 479,300 475,500 Inspection Fines & Citations 6,000 2,500 City Clerk - Business Licenses 7,000 7,000 PD - Liquor, Animal Licenses & Penalties 97,800 98,300 Fire - Licenses & Permits 300 2,300 Public Works - Licenses & Permits 19,415 19,415 Planning & Zoning - Licenses & Permits 1,000 1,000 Total Licenses, Permits & Fines 786,815 782,015 -0.61% Charges for Service Finance Department 5,500 5,500 Assessing 3,000 3,000 Inspections 103,900 109,400 Police 35,000 35,000 Fire 10,500 10,500 Public Works 3,150 3,150 Activity Center 67,500 90,000 Total Charges for Service 228,550 256,550 12.25% Miscellaneous Revenue Franchise Fees 296,200 296,200 Miscellaneous 15,250 15,250 Finance Department 2,000 3,000 Police 500 500 Fire 3,500 3,500 Public Works 5,300 5,300 Activity Center 14,500 4,500 Community Development 30,000 - Total Miscellaneous 367,250 328,250 -10.62% Total Revenues 15,750,838 16,210,954 2.92% City of Hopkins DRAFT General Fund Expenditure Budget For the Year Ending December 31, 2022 DRAFT July 13, 2021 Department 2021 Budget 2022 Budget % Increase (Decrease) City Council 102,095 104,699 2.55% Administrative Services 866,311 920,069 6.21% Finance 426,278 454,887 6.71% Legal 200,000 225,000 12.50% Municipal Building 390,560 383,927 -1.70% Assessing 245,920 267,914 8.94% City Clerk 176,656 217,382 23.05% Inspections 879,588 908,710 3.31% Police 6,242,453 6,388,375 2.34% Fire 1,566,528 1,615,798 3.15% Public Works 3,469,191 3,551,941 2.39% Recreation 291,339 295,457 1.41% Activity Center 456,798 465,998 2.01% Planning & Zoning 233,000 203,108 -12.83% Community Development 114,921 118,489 3.10% Tuition Reimbursement 19,200 19,200 0.00% Contingency 50,000 50,000 0.00% Transfer to Other Funds 20,000 20,000 0.00% Total Expenditures 15,750,838 16,210,954 2.92% City of Hopkins Draft Tax Levy For the Year Ending December 31, 2022 DRAFT July 13, 2021 Actual Draft % Increase Purpose FY2021 FY2021 (Decrease) General Operations General Fund 12,808,552 13,283,468 3.71% Capital Levy - 200,000 100.00% Arts Center 331,182 339,317 2.46% Pavilion Fund 340,000 340,000 0.00% Equipment Replacement 200,000 250,000 25.00% Total General Operations 13,679,734 14,412,785 5.36% Debt Levy 4,108,650 4,023,318 -2.08% Total Levy 17,788,384 18,436,103 3.64% City of Hopkins 2022 Budget Preparation Schedule for City Council The following table outlines the tentative schedule for discussions on important aspects of the City’s Budget. Meeting Date Meeting Type Subject Details January 19 Regular Meeting Finance Update -Overview of Community Engagement Plan and Budget Preparation Schedule for 2022 Budget January- February Regular Meetings & Work Sessions Department Updates -Planning and Development -Police and Fire -Public Works -Community Services and Administration March 16 Work Session Financial Management Plan -Presentation on FMP -Decision on Infrastructure Projects in 2022 -Decision on Burnes Park Debt Service in 2022 April-July N/A Internal Preparations -2020 Audit Ongoing -Departments Prepare Budgets, Equipment Replacement and Capital Improvement Schedules July 13 Work Session Review 2022 Tax Levy and General Fund Budget -First Draft August 10 Work Session Review Capital Improvement Plan (CIP) and Equipment Replacement Plan (ERP) -Park Dedication Fund -Permanent Improvement Revolving Fund (Street Projects) -Equipment Replacement Levy City of Hopkins 2022 Budget Preparation Schedule for City Council Meeting Date Meeting Type Subject Details August 16 (Monday) Budget Engagement Session Review 2022 Tax Levy and General Fund Budget -Presentation -Question and Answer Session September 7 Regular Meeting Review 2022 Tax Levy and General Fund Budget -Preliminary for approval on September 21 September 21 Regular Meeting Approve Preliminary Tax Levy and General Fund Budget -Must be approved by September 30 October 12 Work Session Review Enterprise Fund Budgets and Utility Rates -Water -Sewer -Storm Sewer -Refuse -Pavilion November 3 Regular Meeting Approve CIP, ERP and Utility Rates November 9 Work Session Review Special Revenue Budgets and Activity Center Budget -Chemical Assessment -Parking -Economic Development -Depot -Communications -Arts Center -Activity Center December 6 (Monday) Special Meeting Truth in Taxation Hearing -Overview of 2022 Budget and Tax Levy -Public Comment December 7 Regular Meeting Approve Final Budget & Tax Levy December 21 Regular Meeting Approve Final Budget & Tax Levy -Last scheduled meeting to approve 2022 Draft Budget & Tax Levy July 13, 2021 2022 General Fund Budget City Manager Update on January 5, 2021 Overview of accomplishments in 2020 Reviewed 2021 Mission and Goals 2022 General Fund Budget Department Updates Planning and Development –January 12, 2021 Finance –January 19, 2021 Police Department –February 2, 2021 Fire Department –February 2, 2021 Public Works –February 9, 2021 Recreation –February 9, 202 Administration & Community Services –February 16, 2021 2022 General Fund Budget City Manager Recap on March 2, 2021 Presentation on 2021 Mission & Goals including background and strategies Financial Management Plan update on March 16, 2021 2022 General Fund Budget Restores level of service from 2020 Budget Balanced Budget Revenues = Expenditures $16,210,954 2.92% Increase from 2021 2022 General Fund Expenditures Budget Proposed % Increase FY2021 FY2022 (Decrease) General Government 1,985,244 2,088,582 5.21% Community Services 1,650,085 1,715,603 3.97% Public Safety 7,808,981 8,004,173 2.50% Public Works 3,469,191 3,551,941 2.39% Recreation 748,137 761,455 1.78% Other 89,200 89,200 0.00% 15,750,838 16,210,954 2.92% 2022 General Fund Expenditures 2022 General Fund Revenue Tax Levy –increased $475K or 3.7% Collections budgeted at 100%, same as in prior years Draft budget does not include increase in Local Government Aid due to timing Other revenue categories budgeted conservatively 2022 General Fund Revenue Budget Proposed % Increase FY2021 FY2022 (Decrease) Property Taxes 12,893,552 13,368,468 3.68% Intergov't Revenue 1,474,671 1,475,671 0.07% Licenses, Permits & Fines 786,815 782,015 -0.61% Charges for Service 228,550 256,550 12.25% Misc. Revenue 367,250 328,250 -10.62% Total Revenue 15,750,838 16,210,954 2.92% 2021 General Fund Revenue DRAFT 2022 Tax Levy Actual Draft % Increase Purpose FY2021 FY2022 (Decrease) General Operations General Fund 12,808,552 13,283,468 3.71% Capital Levy - 200,000 100.00% Arts Center 331,182 339,317 2.46% Pavilion Fund 340,000 340,000 0.00% Equipment Replacement 200,000 250,000 25.00% Total General Operations 13,679,734 14,412,785 5.36% Debt Levy 4,108,650 4,023,318 -2.08% Total Levy 17,788,384 18,436,103 3.64% City Taxes on Median Value Home 2021 Actual Estimated Market Value as of 1/2/20 = $291,000 City Taxes -$1,854 Increase of $28 or 1.51% 2022 DRAFT Estimated Market Value as of 1/2/21 = $315,000 City Taxes -$2,012* Increase of $158 or 8.51% *estimated based on preliminary tax capacity information American Rescue Plan Act July 13, 2021 American Rescue Plan Overview $1.9 trillion economic stimulus bill Signed into law on March 11, 2021 Continues many of the programs started by the 2020 CARES Act American Rescue Plan Overview Coronavirus Local Fiscal Recovery Fund $350 billion for States, local, territorial and Tribal governments Allocated by population for Cities with populations less than 50,000 Capped at 75% of most recent budget American Rescue Plan Overview Hopkins is projected to receive a total of $1.94 million Two distributions from Minnesota Management and Budget in 2021 and 2022 Costs must be incurred from March 3, 2021 through December 31, 2024 American Rescue Plan Overview Eligible Uses: Support public health expenditures Address negative economic impacts caused by the public health emergency Replace lost public sector revenue Provide premium pay for essential workers Invest in water, sewer and broadband infrastructure American Rescue Plan Overview Approximately $1.3 million of eligible revenue losses from 2020 Can be used for revenue losses in 2021 to 2024 Next Steps –2022 Budget Meeting Date Meeting Type Subject Details August 10 Work Session Review Capital Improvement Plan and Equipment Replacement Plans -Park Dedication Fund -Permanent Improvement Revolving Fund (Street Projects) -Equipment Replacement Levy August 16 Budget Engagement Session Review 2022 Tax Levy and General Fund Budget -Presentation -Question and Answer Session September 7 Regular Meeting Review 2022 Tax Levy and General Fund Budget -Preliminary for approval on September 21 September 21 Regular Meeting Approve Preliminary Tax Levy and General Fund Budget -Must be approved by September 30 Next Steps –2022 Budget Meeting Date Meeting Type Subject Details October 12 Work Session Review Enterprise Fund Budgets and Utility Rates -Water -Sewer -Storm Sewer -Refuse -Pavilion November 3 Regular Meeting Approve CIP, ERP and Utility Rates November 9 Work Session Review Special Revenue Budgets and Activity Center Budget -Chemical Assessment -Economic Development -Communications -Parking -Depot -Arts Center -Activity Center Next Steps –2022 Budget Meeting Date Meeting Type Subject Details December 6 (Monday) Special Meeting Truth in Taxation Hearing -Overview of 2022 Budget and Tax Levy -Public Comment December 7 Regular Meeting Approve Final Budget and Tax Levy December 21 Regular Meeting Approve Final Budget and Tax Levy -Last scheduled meeting to approve Budget Engagement Session August 16 from 6-7:00 Presentation Question and Answer Session City Hall Zoom: https://www.hopkinsmn.com/466/City- Budget-Process