CR 98-144 Approve Proposed 1998 Levy Proposed 1999 General Fund Budget & Set Budget HearingsPrimary Issues to Consider
1998 Property tax law changes
1999 budget options
Tax impacts of budget options
Lori K Yager
Finance Director
August 6, 1998 c P K City Council Report 98 -144
APPROVE PROPOSED 1998 LEVY
PROPOSED 1999 GENERAL FUND BUDGET
AND SET BUDGET HEARINGS
Proposed Action
Staff recommends adoption of the following motion: Move that Resolution 98 -057 "Approving
proposed 1998 tax levy, collectible in 1999, adopting the preliminary 1999 general fund budget, and
setting public hearing dates" be adopted.
Adoption of this motion will set a preliminary maximum budget and tax levy for 1999. Actual budget
and tax levy adoption will not occur until December, 1998.
Overview
The Truth in Taxation process requires the City of Hopkins to adopt a proposed levy and set hearing
dates in conformance with state statute. Additionally, a preliminary general fund budget must be
established. Adoption of the actual budget will occur in December 1998, and at that time, the final levy
and budget may not exceed the adopted preliminary levy. The city council is charged with the authority
to establish a budget for 1999, staying within the levy limits set forth by the State of Minnesota.
Three options are presented for the 1999 general fund budget, and the 1998/99 tax levy. Budgets within
these options range from $6,598,061, a 1% increase in budget, to $6,760,495, an increase of 3.5% over
the 1998 budget.
The total City tax levy under these options would range from $5,310,181, an increase of 2.23 %, to
$5,472,615, an increase of 5.36 %.
• Staff is recommending that council select a proposed levy that will allow some flexibility when
deliberating the final levy and budget.
Supporting Information
Staff analysis of revenues and expenditures
• 1998 session tax law changes
1999 general fund budget options
1998 tax levy estimate
• Property tax impacts for Hopkins taxes payable 1999
Resolution 98-
• Public Hearings calendar
Staff Analysis of Issues
1998 Budget Analysis
Attached to this report is a summary of 1998 projected actual revenues and expenditures for the general
fund. Also included is a summary of the requested 1999 budget for the general fund budget. This
summary shows you what we have historically received and spent in the general fund and what is being
requested in the future.
Please note the significant decrease in interest earnings revenue compared to the 1998 budgeted amount.
This decrease is directly the result of a change in accounting procedures for allocating interest earnings.
Previously interest was allocated to most funds on a year -end cash balance basis. Finance has
determined that it is more equitable to allocate interest to all the funds on a monthly basis. This however
leaves the general fund short interest earning revenues of about $150,000. This is part of the reason for a
projected tax levy increase this year.
1998 Legislative Actions
The action of the 1998 State Legislature will impact local tax structure in several ways. Levy limits are
imposed, there are tax rate changes and a property tax rebate will be implemented.
For the second consecutive year levy limits will be imposed on all counties and on cities with
populations over 2,500. These limits are imposed to help control property tax increases. Increases are
allowed for factors such as inflation, household growth, and increases in market value due to the
construction of new commercial and industrial properties. The City's budget is designed to fit within the
established levy limits.
Property class rate changes have been enacted. In Minnesota property is taxed at different rates based
upon its type. In 1999, commercial, industrial, utility and apartment property will receive the greatest
reduction in property tax rates. The changes will cause a shift of the property tax burden from these
classes to homestead properties.
The state has again approved a property tax rebate for homeowners and renters. The surplus in state tax
revenue will be distributed back to Minnesota taxpayers in the amount of $500 million.
1999 Budget Options
As part of the preparation for the preliminary budget, departments were instructed to keep personnel
increases at agreed amounts per our labor agreements and to keep all other expenses at or below 2.5%.
Budget Option No. 1
Budget option No. 1 would increase operating expenditures by $65,561 or 1%, which would not
completely cover increases in salary per our labor union agreements. In order to do this, one or two
programs would need to be cut and planned capital outlay expenditures would need to be postponed to a
future time. The same general city services would not be maintained at this level. Even at a 1% increase
in spending our levy will go up by $115,997 or 2.23 %. This is mainly to cover the loss of interest
earnings in the general fund, due to more equitable allocation of earnings to all funds.
Budget Option No. 2
This option would increase spending in the general fund by $151,500, an increase of 2.32 %. With this
option we could maintain city services but almost all scheduled capital expenditures and special projects
for 1999 would need to be postponed until a later date. Also, the solution for technological needs would
be postponed to a later date. For this option the tax levy would increase by $201,936 or 3.89 %. This
again covers the interest earnings loss in the general fund and a 2.32% increase in operating expenses.
Budget Option No. 3
This option would provide an increase in spending in the general fund of $227,995, or an increase of
3.49 %. Departments will be required to go back to their original 1999 budget requests and decrease
them by $180,698 or 2.245 %. Some capital expenditures and special projects will need to be postponed
until a later date. The tax levy increase for this option is $278,431 or 5.36% which covers the interest
earnings loss in the general fund, operating expenditure increases and some capital expenditures. This
option utilizes the maximum tax levy available under the current levy limits.
• Tax Impacts of Budget Options
The general fund is the largest portion of the city's portion of the tax levy. In addition to the general
fund, there is also the equipment replacement fund and the debt service funds. Both the equipment
replacement and debt service fund levy's are staying constant with levy amounts of $485,000 and
$330,000 respectively.
Attached you'll find three different scenarios for Residential and Commercial/Industrial tax impacts.
You'll notice that no matter which scenario is used, Hopkins residents will have an increase in taxes and
under almost all the scenarios the Commercial/Industrial class sees a decrease in their share of property
taxes. This is the result of the legislative decision to shift some of the burden of taxes from
Commercial/Industrial properties to Homestead properties.
• 1998 Public Hearing for the 1999 Budget and 1998/1999 Tax Levy
There are restrictions on which dates cities are able to hold public hearings for their proposed budgets
and property tax levy's for 1999.
This year the legislature has set aside the first two Mondays in December for the use of cities to hold
their Initial Public Hearing and the Continuation Hearing. The dates are December 7, 1998 for the Initial
Hearing and December 14th for the Continuation Hearing. The City of Hopkins can choose other dates if
it would like to but it must not overlap the county or school districts date and must be in between
November 30, 1998 and December 21, 1998. There are other restrictions that must be adhered to also.
Staff is recommending the City Council adopt the first two Mondays in December as the Initial Public
Hearing and the Continuation Hearing and then we will be able to adopt the final budget and tax levy on
Tuesday, December 15, 1998, which is a regular council meeting date.
Attached is a letter from Hennepin County detailing some of the restrictions.
GENERAL FUND
SOURCE
Current Revenues
CURRENT PROPERTY TAX
INTERGOVERNMENTAL REVENUE
LICENSE, PERMITS & FINES
INTEREST EARNINGS
CHARGES FOR CURRENT SERVICES
OTHER REVENUES
NON REVENUE RECEIPTS
TOTAL REVENUES
OBJECTIVE
Current Expenses
SALARIES AND EMPLOYEE BENEFITS $
MATERIALS, SUPPLIES AND SERVICES
CAPITAL OUTLAY
TOTAL
LESS EXPENDITURES CHARGED TO
OTHER ACTIVITIES
NET TOTAL
Other Financing Uses
TOTAL EXPENDITURES
CHANGE IN FUND BALANCE
REVENUES
COMPARATIVE ANALYSIS BY SOURCE
1997
ACTUAL
$ 3,352,709
2,194,089
463,618
126,273
107,496
61,276
EXPENDITURES
COMPARATIVE ANALYSIS BY OBJECTIVE
1997
ACTUAL
4,872,807 $
1,763,018
235,782
6,871,607
(542,084)
6,329,523
8,479
6,338,002
(32,541)
17
1998
PROJECTED
1998
BUDGET
3,412,227 $ 3,439,961
2,085,343 2,131,000
436,198 376,100
137,702 442,439
118,864 70,000
84,397 36,000
58,392 37,000
$ 6,305,461 $ 6,333,123 $ 6,532,500
1998
PROJECTED
4,985,206 $
1,731,867
180,785
6,897,858 $
(596,385)
6,301,473
11,200
6,312,673
20,450
1998
BUDGET
FUND 101
1999
REQUESTED
3,718,881
2,151,714
431,500
265,300
96,000
60,000
37,100
6,760,495
1999
REQUESTED
4,979,600 $ 5,340,070
1,816,400 2,184,618
167,400 175,265
6,963,400 $ 7,699,953
(442,500) (770,360)
6,520,900 6,929,593
11,600 11,600
6,532,500 $ 6,941,193
(180,698)
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69
August 10, 1998
John E. Schedler
Hopkins City Hall
1010 First Street S
Hopkins MN 55343
•
Hennepin County
An Equal Opportunity. Employer
Dear Mr. Schedler:
As required by the Truth in Taxation legislation, we are notifying you of the public
hearing dates set for the Hennepin County Board of Commissioners,
Metropolitan Special Taxing Districts and the school districts to discuss their
proposed budget and property tax levy for 1999.
Taxing District Initial Hearing
Hennepin County December 3, 1998
Metro Spcl Taxing Districts December 2, 1998
School Districts # 270 November 30, 1998
# 273 December 8, 1998
# 283 December 1, 1998
The 1998 Legislature set aside the first two. Mondays in December for the
use of the cities. Those dates are December7, 1998 for the Initial Hearing
and December 14 for the Continuation Hearing. You can use those dates or
select dates other than those shown above. Although we will only be printing the
initial hearing date on the notice, the continuation date also needs to be set at
this time. The earliest hearing date is November 30, 1998 and the last date is
December 21, 1998. Remember, the dates shown above CANNOT be used
for your initial hearing. Also, please remember that the continuation date must
be at least five (5) business days but no more than fourteen (14) business days
after the initial public hearing.
Taxpayer Services Department
Continuation Hearing
December 15, 1998
December 9, 1998
December 17, 1998
December 16, 1998
December 8, 1998
A -600 Hennepin County Government Center Recycled Paper
Minneapolis, Minnesota 55487 -0060
August 10, 1998
Truth in Taxation Budget Hearings
Page 2
Since the public hearing and mailing address for comments information usually
remains the same, we are listing the 1997 data and asking you to confirm or
update that information. As required by Minnesota Statute, please return the
form no later than September 15, 1998.
The expense of preparing and mailing the Truth in Taxation notices is to be
divided in thirds among the county, school and city. Each city's portion of the
third will be determined by the number of parcels in your city. As in the past, you
will be billed in December after the mailing costs have been determined.
If you have any questions, please contact me at 348 -5100.
Sincerely,
Ait
Marie A. Kunze, Mana
Property Tax Division
:ceu
Enclosure
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION 98-57
RESOLUTION APPROVING PROPOSED 1998 TAX LEVY
COLLECTIBLE IN 1999, ADOPTING THE PRELIMINARY 1999 BUDGET,
AND SETTING PUBLIC HEARING DATES
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF HOPKINS, MINNESOTA, that the
following sums of money be levied for the current year collectible in 1999 upon the taxable property in
said City of Hopkins, for the following purposes.
General Fund
Equipment Replacement Fund
General Obligation Bonds
Improvement Bonds
Total Levy
$4,657,615
$ 485,000
$ 240,000
$ 90,000
$5,472,615
This levy is made based on current law and the 1999 General Fund Budget of $6,795,095.
Provision has been made for the payment of the City's contributory share to the Public Employees
Retirement Association.
Provision has also been made for the payment of principal and interest on the following bond issues:
Redevelopment Bonds 1 -1 -97
G.O. Sewer Revenue Bonds 12 -1 -89 & Refunded 10 -15 -93
Redevelopment Bonds 12 -1 -89 & Refunded 10 -15 -93
Park Bonds 3-1-90* & Refunded 10-15-93*
Refunding Bonds 3 -1 -90 & Refunded 10 -15 -93
*Levy
Improvement Revolving Bonds 3 -1 -90*
Redevelopment Bonds 10 -1 -96
Refunding Bonds (Taxable) 2 -1 -92
Improvement Revolving Bonds 8 -1 -92*
Housing Bonds 9 -1 -95
Housing Bonds 6 -1 -97
Public hearing date for the 1999 budget is December 7, 1998, with a continuation date of December 14,
1998, if necessary.
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 at a regular meeting of the Council held this 1st day
of September, 1998.
ATTEST:
Terry Obermaier, City Clerk
Charles D. Redepenning, Mayor