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2022 Tax Levy & Budget CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: November 9, 2021 Subject: Recommended 2022 Tax Levy & Budget _____________________________________________________________________ PURPOSE No formal action is required at this meeting. Staff is requesting input on recommended 2022 Tax Levy & Budget. INFORMATION Summary A draft version of the 2022 Budget and Tax Levy was prepared by staff and presented to City Council on July 13th. The draft included both conservative revenue estimates and decreased expenditures. The City also hosted a virtual budget engagement session on August 16th that reviewed a similar version of the budget and tax levy. Local Government Aid amounts were published the last week in July. The certified amount of $880,066 was incorporated, which was an increase of $26,395 and results in a reduction to the tax levy of the same amount. On September 7th City Council approved a preliminary tax levy of $18,409,708, which is a $621,324 or 3.49% increase from 2021. Based on preliminary tax capacity information, city taxes on a median value home ($315,000) would be $2,037 or a $182 increase from 2021. City Council also directed staff to continue to look for additional ways to reduce the 2022 levy before approval. Finance Department Actual Recommended % Increase Purpose FY2021 FY2022 (Decrease) General Operations General Fund 12,808,552 13,219,739 3.21% Capital Levy - 190,000 100.00% Arts Center 331,182 339,317 2.46% Pavilion Fund 340,000 340,000 0.00% Equipment Replacement 200,000 75,000 -62.50% Total General Operations 13,679,734 14,164,056 3.54% Debt Levy 4,108,650 4,023,318 -2.08% Total Levy 17,788,384 18,187,374 2.24% Recommended Budget and Tax Levy The Final 2022 levy would be set at $18,187,374, a $398,990 or 2.24% increase from 2021. Based on preliminary tax capacity information, city taxes on a median value home ($315,000) will be $2,008, a $154 increase from 2021. General Fund Levy: The general fund levy would be set at $13,219,739, which is a $37,334 reduction from the preliminary levy. Intergovernmental chargebacks would be increased for administrative services provided to other funds. The allocation amounts have been reviewed and adjusted to reflect current service needs. Capital Levy: The capital levy would set at $190,000, which is a $10,000 reduction from the preliminary levy. The design work for the Activity Center-Facility Improvement project would be delayed until 2023 or later. The project would not be completed until 2024 or later. Other projects at the Activity Center and Fire Station would proceed. The Capital Improvement Fund would be projected to increase its fund balance by $87,172 and end 2022 with a fund balance of $294,684. Equipment Replacement Levy: The equipment replacement levy would be set at $75,000, which is a $175,000 reduction from the preliminary levy. This levy amount would still allow for the purchase of all equipment in the Equipment Replacement Fund. Both the fire truck and single axle dump truck funded with equipment certificates (debt). The Equipment Replacement Fund would be projected to increase its fund balance by $136,063 and end 2022 with a fund balance of $920,691. Fund Requested Projects: The surplus amount of $223,235 (Capital-$87,172 & Equipment- $136,063) could be reallocated to fund requested projects. The following three projects do not have a funding source: •City Street Lighting Upgrades - $110,000 •Pavilion/Central Park Sound System - $70,000 •Pavilion Arena Lighting Replacement - $18,000 City of Hopkins General Fund Revenue Budget For the Year Ending December 31, 2022 Recommended November 9, 2021 Department 2021 Budget 2022 Budget % Increase (Decrease) Property Taxes 12,893,552 13,304,739 3.19% Intergovernmental Revenue Local Government Aid 853,671 880,066 Intergovernmental Revenue - Other 621,000 622,000 Total Intergovernmental Revenue 1,474,671 1,502,066 1.86% 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 16,173,620 2.68% City of Hopkins General Fund Expenditure Budget For the Year Ending December 31, 2022 Recommended November 9, 2021 Department 2021 Budget 2022 Budget % Increase (Decrease) City Council 102,095 104,699 2.55% Administrative Services 866,311 912,950 5.38% Finance 426,278 462,665 8.54% Legal 200,000 225,000 12.50% Municipal Building 390,560 380,901 -2.47% Assessing 245,920 244,158 -0.72% City Clerk 176,656 219,803 24.42% Inspections 879,588 904,960 2.88% Police 6,242,453 6,417,543 2.80% Fire 1,566,528 1,616,824 3.21% Public Works 3,469,191 3,509,559 1.16% Recreation 291,339 295,475 1.42% Activity Center 456,798 466,388 2.10% Planning & Zoning 233,000 204,784 -12.11% Community Development 114,921 118,711 3.30% 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 16,173,620 2.68% Recommended 2022 Budget and Tax Levy November 9, 2021 Preliminary Budget & Tax Levy 1st Draft Budget & Tax Levy Presented to City Council on July 13, 2021 Budget Engagement Session held on August 16, 2021 Preliminary Budget & Tax Levy Preliminary Budget and Tax Levy approved on September 7, 2021 Tax levy of $18.4 million or 3.49% increase City Council directed staff to continue to look for areas to reduce levy Recommended Budget & Tax Levy General Fund Budget and Levy Balanced Budget Revenues = Expenditures $16,173,620 2.68% increase from 2021 Restores level of service from 2020 Budget Recommended Budget & Tax Levy General Fund Budget and Levy Intergovernmental chargebacks have been reviewed and reallocated Both Reduced by $37,334 General Fund Revenues General Fund Expenditures Recommended Budget & Tax Levy Capital Levy Reduce by $10,000 Delay Activity Center-Facility project, design work previously scheduled in 2022 Capital Improvement Fund would increase by $87,172 Recommended Budget & Tax Levy Equipment Replacement Levy Reduce by $175,000 Issue equipment certificates for fire truck and single axle dump truck Still allows purchase of all equipment in plan Equipment Replacement fund would increase by $136,063 Recommended Budget & Tax Levy Fund Request Projects City Street Lighting -$110,000 Pavilion/Central Park Sound System $70,000 Pavilion Arena Lighting Replacement -$18,000 Recommended Budget & Tax Levy Actual Recommended % Increase Purpose FY2021 FY2022 (Decrease) General Operations General Fund 12,808,552 13,219,739 3.21% Capital Levy - 190,000 100.00% Arts Center 331,182 339,317 2.46% Pavilion Fund 340,000 340,000 0.00% Equipment Replacement 200,000 75,000 -62.50% Total General Operations 13,679,734 14,164,056 3.54% Debt Levy 4,108,650 4,023,318 -2.08% Total Levy 17,788,384 18,187,374 2.24% 2022 City Taxes -Projected 2022 Preliminary Levy Tax Levy Increases 3.49% Taxes on Median Value Home -$2,037 Increase of $182 2022 Recommended Levy Tax Levy Increases 2.24% Taxes on Median Value Home -$2,008 Decrease of $154 Recommended Taxes on Median Value Home ($315,000) Area Supported by Levy Dollar Amount Percentage Public Safety $754 37.4% General Government $277 13.9% Public Works $223 11.3% Parks and Recreation $137 6.8% Pavilion $37 1.8% Arts Center $37 1.8% Activity Center $36 1.8% Capital Projects and Debt $507 25.2% Total $2,008 100.0%