VII.3. Resolution Approving the Proposed 2025 Tax Levy, Proposed 2025 General Fund Budget and Setting Budget Meeting Date; Bishop
CITY OF HOPKINS
City Council Report 2024-099
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: September 3, 2024
Subject: Approve Proposed 2025 Levy, Proposed 2025 General Fund Budget and
Set Budget Meeting Date
_____________________________________________________________________
RECOMMENDED ACTION
MOTION TO Approve Resolution 2024-051 Approving the Proposed 2025 Tax Levy,
Setting Debt Service Levels at Amounts Under Those Required in the Bond Documents,
Approving the Proposed 2025 Budget and Setting the Budget Meeting Date.
OVERVIEW
The City is required to certify a proposed tax levy and submit it to Hennepin County by
September 30th. This will be the maximum levy for 2025 and can only be reduced. The
certified levy amount is also used for truth in taxation notices.
The City must hold a public hearing on the budget between November 25th and
December 28th. The proposed date of Tuesday, December 3rd would allow time to
consider comments heard at the public hearing before passing the final tax levy and
budget.
SUPPORTING INFORMATION
• Overview of Preliminary Tax Levy and General Fund Budget
• 2025 Preliminary General Fund Budget
• 2025 Tax Levy Summary
• Resolution 2024-051
Finance Department
Overview of Preliminary Tax Levy and General Fund Budget
The City Council reviewed draft proposals for the 2025 General Fund Budget and Tax
Levy on July 16th. The three proposals presented were for an 8.46%, 6.88% and 5.26%
levy increase when compared to 2024. The City Council gave input and indicated their
support for a levy increase between 5% and 6%. The council also indicated interest in
including some items that had been proposed as reductions. A levy increase of 3% or
no increase (0%) when compared to 2024 would require further reductions of $590,368
or $1,104,616 when compared to the tax levy being recommended for approval.
The City Council reviewed the 2025-2029 Capital Improvement Plan and Equipment
Replacement Plan on August 5th. Council will continue to review both plans in the
upcoming months. Council also expressed concern with the continued delay of street
light upgrades. Staff is proposing the use of available fund balance reserves in the
Equipment Replacement Plan as a potential funding source.
2025 Tax Levy
The 2025 Tax Levy has been prepared based on debt service needs, preliminary
ERP/CIP documents, initial budgets for special revenue funds and City Council input.
The total tax levy is $20,783,55, this is a $1,104,616 or 5.61% increase from 2024.
Based on preliminary tax capacity information, city taxes on a median value home
($378,800) would be $2,245, which is a $54 or 2.46% increase from 2024.
2025 General Fund Budget
The 2025 Budget includes salary and benefit increases for current positions. Other
additions with tax levy impacts are:
• Additional City Contribution to the Fire Relief - $96,000
o The City makes an annual contribution to the Hopkins Fire Department
Relief Association. The contribution is deposited into a pension trust fund
and used for retirement, disability or death benefit payments. An increased
City Contribution would allow for an increase in retirement benefits. This is
a retention and recruitment tool for paid on-call firefighters. 3
• Youth Social Worker Contract with Hennepin County - $88,000
o This is a current contract that has been funded through ARPA grant funds.
• Planner Position - $40,000
o This is a current position that has been funded through ARPA grant funds.
Current responsibilities include: Partners in Energy Plan, Sustainable
Building Policy, Façade Loan Program, End of Trip Facilities Plan, Grant
Administration, Single-Family Zoning and Sign Permits.
o The budget increase represents 1/3 of the position costs. The remaining
cost is proposed to be split between the Economic Development and
Sustainability Funds.
• Maintenance Worker for Forestry/Parks Division - $30,000
o This position was funded in the 2024 Budget with a May 1st start date.
Additional costs are for the annual salary/benefit cost.
The General Fund budget will decrease its fund balance by $400,000. Revenues are set
at $19,305,940. Expenditures are set at $19,705,940.
Use of Fund Balance in 2024 & 2025
The City’s Fund Balance Policy (Legislative Policy 6-G) is to maintain a fund balance
minimum of five months or 42% of the prior fiscal year General Fund operating
expenditures for cashflow, contingencies or emergencies. The 2024 Approved/Final
Budget and the 2025 Proposed/Preliminary Budget both include the use of $400,000 of
fund balance. The use of fund balance in 2024 & 2025 is possible based on operating
surpluses in 2020-2023. Based on the 2024 Approved/Final Budget & 2025
Proposed/Preliminary Budget the City would end 2025 with a fund balance of
$7,903,397 or 42.9% of the operating budget. The use of fund balance allows for a
lower tax levy in 2025, while also maintaining fund balance based on policy.
Capital Levy
There will be a $445,000 capital levy in 2025. Major projects include tuckpointing, brick
repair and roof replacement at the Activity Center and a City-Wide door access control
system upgrades.
Arts Center Levy
The Arts Center Levy will be set at $380,000, an increase of $35,000 or 10.14%.
Communications fund transfers to the Arts Center would be eliminated in 2025, which is
offset by the high tax levy increase. The operating support received by the Arts Center
is consistent with levels received since 2018 (with 3% annual increases).
Pavilion Levy
The Pavilion Levy will be set at $448,500 in 2025. The majority of the levy ($340,000)
will provide for debt service payments related to the 2018 remodel project. The
remaining amounts will be used for exit door replacements and equipment.
Equipment Replacement Levy
The equipment levy will be set at $250,000 and rely on reserves to fund purchases in
2025. On August 5th, staff presented a draft of the ERP with a projected ending fund
balance of $929,427. Staff is proposing using a portion of this balance to fund street
light upgrades in 2025.
Permanent Improvement Levy
There will be a $50,000 permanent improvement levy used to repair or replace fencing
along Excelsior Blvd. This levy has previously been used to fund street lighting
upgrades.
Communications Levy
A tax levy is needed to support the Communications fund in 2025. It will be set at
$40,000. The Communications Fund has operated at a loss for several years due to
declining cable franchise revenue.
Parking Levy
A tax levy is needed to support parking operations in 2025. It will be set at $75,000. The
parking ramp fund was historically supported by parking permits and other user fees.
Revenue has dropped significantly since the COVID-19 pandemic.
City of Hopkins
General Fund Revenue Budget
For the Year Ending December 31, 2025
Preliminary
September 3, 2024
Department 2024 Budget 2025 Budget
% Increase
(Decrease)
Property Taxes 14,511,326 15,431,525 6.34%
Intergovernmental Revenue
Local Government Aid 1,081,012 1,084,775
Intergovernmental Revenue - Other 797,000 810,000
Total Intergovernmental Revenue 1,878,012 1,894,775 0.89%
Licenses, Permits & Fines
Court Fines & Penalties 176,000 176,000
Building Permits & Inspections 563,000 693,500
Inspection Fines & Citations 3,000 3,000
City Clerk - Business Licenses 8,900 12,400
PD - Liquor, Animal Licenses & Penalties 101,800 110,150
Fire - Licenses & Permits 4,000 4,000
Public Works - Licenses & Permits 19,615 19,615
Planning & Zoning - Licenses & Permits 2,000 4,000
Total Licenses, Permits & Fines 878,315 1,022,665 16.43%
Charges for Service
Finance Department 8,500 8,600
Inspections 175,450 274,775
Police 35,000 35,000
Fire 10,500 10,500
Public Works 3,150 3,000
Activity Center 118,500 154,500
Planning & Zoning - 16,000
Total Charges for Service 351,100 502,375 43.09%
Miscellaneous Revenue
Franchise Fees 346,200 380,600
Miscellaneous 25,250 45,000
Finance Department 3,000 3,000
Police 500 500
Fire 3,500 3,500
Public Works 10,600 8,000
Activity Center 14,000 14,000
Total Miscellaneous 403,050 454,600 12.79%
Total Revenues 18,021,803 19,305,940 7.13%
City of Hopkins
General Fund Expenditure Budget
For the Year Ending December 31, 2025
Preliminary
September 3, 2024
Department 2024 Budget 2025 Budget
% Increase
(Decrease)
City Council 133,033 156,598 17.71%
Administrative Services 536,656 678,990 26.52%
Information Technology 644,926 718,226 11.37%
Diversity, Equity & Inclusion 133,530 107,000 -19.87%
Finance 732,254 623,879 -14.80%
Legal 250,000 265,000 6.00%
Municipal Building 404,690 407,462 0.68%
City Clerk 339,242 327,542 -3.45%
Inspections 1,208,270 1,265,343 4.72%
Police 7,185,841 7,519,164 4.64%
Fire 1,709,014 1,982,178 15.98%
Public Works 3,858,812 4,289,317 11.16%
Recreation 276,441 276,735 0.11%
Activity Center 554,334 609,694 9.99%
Planning & Zoning 196,248 247,455 26.09%
Community Development 129,312 125,357 -3.06%
Tuition Reimbursement 19,200 19,200 0.00%
Contingency 50,000 25,000 -50.00%
Transfer to Depot/ACE Program 60,000 61,800 3.00%
Total Expenditures 18,421,803 19,705,940 6.97%
City of Hopkins
Tax Levy
For the Year Ending December 31, 2025
Preliminary
September 3, 2024
Actual Preliminary % Increase
Purpose FY2024 FY 2025 (Decrease)
General Operations
General Fund 14,426,326 15,346,525 6.38%
Capital Levy - 445,000 100.00%
Arts Center 345,000 380,000 10.14%
Pavilion Fund 440,000 448,500 1.93%
Equipment Replacement 360,000 250,000 -30.56%
Permanent Improvement - 50,000 100.00%
Communications - 40,000 100.00%
Parking - 75,000 100.00%
Total General Operations 15,571,326 17,035,025 9.40%
Debt Levy 4,107,613 3,748,530 -8.74%
Total Levy 19,678,939 20,783,555 5.61%
Actual Preliminary
FY2024 5.61% Increase
City Taxes 2,191$ 2,245$
Dollar Increase 3$ 54$
Percentage Increase 0.14%2.46%
Preliminary Tax Calculation for a Median Value Home
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 2024-051
APPROVING THE PROPOSED 2025 TAX LEVY, SETTING DEBT SERVICE
LEVELS AT LEVELS UNDER THOSE REQUIRED IN THE BOND
DOCUMENTS, APPROVING THE PROPOSED 2025 BUDGET,
AND SETTING THE BUDGET MEETING DATE
NOW THEREFORE BE IT RESOLVED, that the City Council of the City of Hopkins
hereby approves the following sums be levied for 2025 upon the taxable property in the
City of Hopkins, for the following purposes:
General Levy
General $17,035,025
Special Levies
Debt Levies
2014A GO Bonds 97,000
2015A GO Street Reconstruction Bonds 240,000
2015B GO Tax Abatement Bonds 105,000
2016A GO Improvement Bonds 85,000
2016B GO Tax Abatement Bonds 10,000
2016C GO Bonds 125,000
2017A GO Street Reconstruction Bonds 990,000
2017B GO Tax Abatement Bonds 158,020
2018A GO Equipment Certificates 52,794
2018A GO Improvement Bonds 375,000
2019A GO Bonds 384,889
2019B GO Refunding Bonds 165,000
2020A GO Bonds 156,934
2020B GO Refunding Bonds 238,627
2021A GO Bonds 214,038
2022A GO Bonds 197,486
2022A GO Equipment Certificates 123,742
2023A GP Temporary Bonds 30,000
Subtotal Special Levies $3,748,530
Total Levy $20,783,555
That based upon staff analysis of special assessments currently levied for Permanent
Improvement Bonds, alternative revenue sources for the Capital Improvement Bonds
and Equipment Certificates, and available reserves within all debt service funds listed
below, that the debt service levies for 2025 for the following issues be levied at amounts
less than provided by the bond covenants.
Bond Issue
$1,895,000 GO Bonds of 2014A $ 97,000
$4,100,000 GO Street Reconstruction Bonds of 2015A $240,000
$2,940,000 GO Tax Abatement Bonds of 2015B $105,000
$4,335,000 GO Improvement Bonds of 2016A $ 85,000
$1,630,000 GO Tax Abatement Bonds of 2016B $ 10,000
$1,875,000 GO Bonds of 2016C $125,000
$6,125,000 GO Improvement Bonds of 2018A $375,000
$590,000 GO Equipment Certificates of 2018A $ 52,794
$3,285,000 GO Tax Abatement Bonds of 2018B $ 0
$12,185,000 GO Bonds of 2019A $384,889
$2,785,000 GO Bonds of 2020A $156,934
That the Proposed 2025 General Fund Budget be set at $19,705,940
That the budget meeting to discuss the 2025 budget and tax levy be set for December
3, 2024 at 6:30 PM in the City Council Chambers.
BE IT FURTHER RESOLVED that the City Clerk is hereby ordered and directed to
transmit a certified copy of this resolution to the County Auditor of Hennepin County,
Minnesota
Adopted by the City Council of the City of Hopkins this 3rd day of September, 2024.
By:___________________________
Patrick Hanlon, Mayor
ATTEST:
_______________________________
Amy Domeier, City Clerk