CR 06-095 Approve Proposed 2007 Levy, Proposed 2007 General Fund Budget and Set Budget Public Hearing Dates
August 31, 2006
Council Report 2006-095
APPROVE PROPOSED 2007 LEVY,
PROPOSED 2007 GENERAL FUND BUDGET
AND SET BUDGET PUBLIC HEARING DATES
Proposed Action
Staff recommends adoption of the following motion: Move to approve Resolution 2006-053 "Approving proposed
2007 tax levy. proposed 2007 general fund budget and setting public hearing dates".
Adoption of resolution 2006-053 will set a preliminary maximum tax levy for 2007, and approve a proposed 2007
general fund budget. Actual budget and tax levy adoption will not occur until December 2006.
Overview
The Truth in Taxation process requires the City of Hopkins to certify a proposed levy and set public hearing dates in
conformance with state statute. A proposed general fund budget has been established. Adoption of the actual budget
will occur in December 2006, and at that time, the final levy may not exceed the approved proposed levy. The city
council is charged with the authority to establish a budget for 2007 and set the preliminary levy. Levy limits have not
been reinstated to date, which allows us more flexibility in setting the budget and levy for 2007.
Staff is recommending that council approve the resolution setting the proposed levy for general fund
operations, approve the levy adequate for the payment of debt, approve a levy for the Housing and
Redevelopment Authority and capital improvements and to set the public hearing dates as set forth in the
resolution.
Primary Issues to Consider
Legislative impacts
2007 budget concerns
Tax impacts of budget concerns
SUDDortin!! Information
Staff analysis
Power point presentation slides
2007 proposed general fund budget
Historic Tax Levy Table
Property tax impacts for Hopkins taxes payable 2007
Resolution 2006-053
~~
Christine M. Harkess. CPA, CGFM
Finance Director
Staff Analvsis
2006 Legislative Actions
Local government aid (LGA), a property tax relief program to 836 of 853 cities, that ensures residents have access to
basic services, regardless of where in Minnesota they live, did not see any changes in 2006 that would impact the city
of Hopkins. The City of Hopkins receives $50,000 in LGA, down from $1,880,000 four years ago, now a very small
portion of the budget.
Levy limits were repealed for all cities for 2005 and to date have not been reinstated.
2007 Levy
The City of Hopkins is proposing a total tax levy increase of $579,448 or 6.87%. A current general fund operating
levy increase of7.9%, a current debt service levy decrease of .8% or $10,000, no increase for the PERA adjustment,
or Housing and Redevelopment Authority and a Capital levy increase of $25,000. The City's levy's are proposed as
follows: General fund $7,728,711, HRA $20,000, PERA $11,815, Capital $50,000 and Debt $1,207,000 for a total
levy of$9,017,526. The overall tax capacity rate for the city will decrease to 47.299% from 48.262%, which is due to
increased values and new construction.
The decrease in the debt levy is a result of decreased debt requirements per the bond covenant and by again reducing
the debt levy by $80,000 with excess project funds. This is the second year of a 4-year debt service reduction due to
project savings on our $13M facility projects. The Housing and Redevelopment Authority levy for 2007 is a
continuation of the reinstatement of their past levy authority, however it remains at a significantly reduced level. In an
ongoing attempt to establish a fund for capital improvements we are continuing the levy implemented in 2005.
The City of Hopkins' taxable market value increased by 8.8% or $128 million due to new development, construction
and general increases in property values. All these factors contribute to keeping the proposed 2007 levy at a moderate
level
2007 Budget Analysis
The 2007 general fund budget, and the 2007 general operating tax levy are proposed at $9,450,921 and $7,728,711,
respectively. The proposed levy is set at maximum amount with a possibility of future reductions. The general fund
budget is proposed to increase by $564,593 or 6.33% over the 2006 budget. Expenditures have increased due to
salary and benefit increases, insurance - health and liability/property, fuel and fuel related products such as
bituminous products, and heating costs. Many of these costs are beyond our control.
Because we are a service related operation, salaries and benefits compose 76% of current general fund expenditures
and any labor negotiations have a tremendous impact on the budget. The council and staff will continue to work on a
final budget that will allow for essential programs and services to be accomplished. Attached to this report is a
summary of 2007 general fund budget revenues and expenditure requests. The summary shows historical revenues and
expenditures, which allows us to analyze current and future requests.
Tax Impacts of Levy's
Attached you'll find the proposed levy impacts for residential and commercial property.
Historically the City Council has set the proposed levy amount at the State's recommended levy limit. This is the
third year without levy limits so we continue to have more flexibility in setting the levy. Finance is recommending
that the Council set the proposed levy at an amount that provides adequate resources to meet the needs of the
community while minimizing the impact on property owners.
2006 Public Hearings for the 2007 Budget and 2007 Tax Levy
Cities with populations above 500 are required to hold public hearings to give notification of the proposed property
tax levy for the taxes payable in 2007 and the proposed budget for 2007. The percentage increase in the property
taxes proposed and the specific purposes for a property tax increase must be discussed at the hearing.
There are restrictions on which dates cities are able to hold public hearings for their proposed 2007 budget and
property tax levy. 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 City of Hopkins can choose other dates but it ~ust not
overlap the county or school districts dates and must be between November 29,2006 and December 20,2006. There
are other restrictions that must be adhered to also.
Staff is recommending the City Council set its initial hearing date for December 4, 2006 with a continuation hearing
date (if needed) for December 12,2006, and final adoption at the December 19,2006 council meeting.
-- --
,"""o,~ ,'0
Truth and Taxation Process
2006 Preliminary Levy " Council adopts a proposed levy.
and Budget $i Council sets public hearing dates for
final proposed levy and general fund
budget.
~ The recommended public hearing
dates are Monday, December 4th
with a continuation hearing set for
Tuesday, December 12th, if needed.
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Legislative changes effecting local City Planning
governments $ For 2007, city council and staff have been
Ij; Limited Market Value has been extended to meeting and discussing options for
2009 which mitigates the impact of taxes on maintaining a balanced budget in 2007 and
property that experiences significant beyond.
increases in value. 1- Options include budget cuts, use of
l&I There has been no change to the Local reserves, taxes and new revenue sources.
Govemment Aid formula as it related to 1- The 2007 General Fund budget details will be
Hopkins. outlined prior to adoption in December 2006 of
$ Levy limits repealed in 2005 were not the final budget and levy.
reinstated for 2007.
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Why do levies go up? How do levies go down?
"" The city experiences increases in the levy
through increased spending or decreases in 1- The city may reduce its tax levy by decreasing
other revenue sources. costs or increasing other revenue sources.
1- Spending may increase for several reasons. To decrease costs the city could eliminate
Inflationary increases in salaries and benefits, programs or services it currently provides to the
property & liability insurance, fuel & fuel related citizens. The city may also outsource certain city
products, equipment costs, additional services at a lower cost.
programs, infrastructure improvements, debt ~ Increased revenues are derived primarily from
etc. .. new fees and increased charges for services.
14- Other revenue sources may decrease due to a $ The City may receive grants for specific
slow economy, reduction in government aids, programs.
reduced interest earnings, etc...
1
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What are our tax needs?
~ The 2007 preliminary levy has a proposed
increase of $579,448 or a 6.87% increase
over the 2006 levy.
!\<< The increase is a result of inflationary
increases in expenditures, primarily salaries &
benefits, insurance premiums, fuel costs, fuel
related product costs, heating and electric
costs. Debt service payments on G.O Debt
also has an effect on the tax levy.
iN'~1~~~~~~~[&.%~~~~~~~r~~---'
2007 Proposed General Fund Budget and
2007 Preliminary Levy
2007 General Fund 2007 Levv
Budaet $9,017,526
$9,450,921 This is an increase over
This is a increase over last years levy of
last years budget of $579,448 or 6.87%.
6.33%. The increase is a result of
The increase is due to new inflationary increases,
initiatives, negotiated new initiatives and debt
personnel costs and service requirements for
inflationary increases. G.O Debt.
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ESTIMATED PROPERTY TAX IMPACTS FOR CITY LEVY'S
RESIDENTIAL HOMESTEAD PROPERTY
ITax Rate 48 262 47 299 I Iocr/(Decr)
Incr/(Decr) over PreVIOUS
Cdy Cdy over PreVIOUS Incr/(Decr) Year "Tax
2005 2006 Taxes Taxes Year at Incr over PrevtOUS Rate II same
Marl<et Market Pa)'lble Payable Tax Rate & Year at same wdh Market
~ ~ ~-1!!!L Market Vak1e Market Vak1e Value Incr
S 164,700 S 175,000 S 795 S 828 S 33 S (16) S 50
I S 221,100 $235,000 $ 1,068 $ 1,112 S 44 $ (21) $ 67 I
S 325,200 S 345,400 S 1,569 S 1,634 S 64 S (31) S '11
S 491,400 S 521,900 S 2;372 S 2,469 S '11 S (47) S 147
~',':~';;~!F::,:~:2:""""""" t"'::~~ ~~ ::'7<"::? ~
Tax Levy Options
~ The levy set this evening is the maximum
levy for 2007.
~ Levy can, and most likely will be reduced
but it cannot be increased.
'*' Staff continues to evaluate the budget
making adjustments and revisions in our
goal of reducing the levy from the
preliminary amount set.
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How will my taxes be affected?
<<0 The City of Hopkins' taxable market value increased
by 8.8% or $128 million due to new construction,
development and increases in property values.
~ Due to increases in the taxable market value the
preliminary tax rate for the city decreased by an
estimated 1.995%.
... The market value of the median (average) home in
Hopkins increased about 6.2% for 2007 to $235,000.
(10 Property that had significant increases in valuation
will most likely realize an increase in taxes.
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Development and Taxes
City property taxes for 2007 are going to be affected by
decisions that were made over past years for various
development projects that continue to be added to the tax
base.
This Council and past Councils have seen the wisdom of
committing time, energy, and funding to projects whose payoff
may be years in the future,
Projects funded by tax increment financing have added to the
City's tax base. These projects have also created the
environment for additional development.
2
----- ----- - ----- - - -
2007 Preliminary Levy
and Budget
I
I Questions?
3
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 2006-053
RESOLUTION APPROVING THE PROPOSED 2007 TAX LEVY,
APPROVING THE PROPOSED 2007 BUDGET, AND SETTING PUBLIC HEARING DATES
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF HOPKINS, MINNESOTA,
That the following sums be levied for 2007 upon the taxable property in said City of Hopkins,
for the following purposes.
General Fund
Housing & Redevelopment Authority
PERA Rate Increase
Capital Levy
General Obligation Bonds
Improvement Bonds
HRA Leased Revenue Bonds
Total Levy
$7,728,711
20,000
11,815
50,000
175,000
147,000
885.000
$9,017,526
That the Proposed 2007 General Fund Budget be set at $9,450,921.
Provision has also been made for the payment of principal an interest for the following bond issues:
1-1-97 Redevelopment Bonds 10-1-96 Redevelopment Bonds
12-1-89 Sewer Revenue Bonds 2-1-92 Taxable Refunding Bonds
Refunded 10-15-93 & 12-4-01 12-1-89 Redevelopment Bonds
8-1-92 Improvement Revolving Bonds Refunded 10-15-93
Refunded 12-4-01 3-1-90 Park Bonds Refunded 10-15-93 & 12-4-01
Housing Bonds 5-1-99 Taxable GO Housing Improvement Bonds
Housing Bonds 8-1-99 GO Storm Sewer Bonds
GO Housing Improvement Bonds 4-1-00 Water Revenue Bonds
GO Improvement Revolving Bonds 10-1-02 GO Improvement Revolving Bonds
Redevelopment Bonds 10-1-02 BRA Lease Revenue Bonds
BRA Lease Revenue Bonds 6-1-03 GO Storm Sewer Revenue Bonds
9-1-95
6-1-97
8-1-99
8-1-99
10-1-02
6-1-03
Bold = Included in Levy
That the public hearing for the 2007 Budget and Tax Levy be set for December 4,2006 with a continuation hearing
date of December 12, 2006 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 5th day of September 2006.
By
Eugene Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk
0/0
Change
2006
BUDGET
2005
ACTUAL
2004
ACTUAL
General Fund Budget
2003
ACTUAL
SOURCE
Current Revenues
7.460/0
1.72%
1.99%
-2.25%
66.67%
6.330/0
7,748,711
421,010
647,000
110,000
208,950
25,250
290,000
9,450,921
$
7,211,078
413,910
634,400
110,000
213,750
15,150
290,000
8,888,288
$
6,947,865
732,468
671,079
72,883
438,548
13,160
307,457
9,183,460
$
6,372,727
743,812
687,655
48,919
277,206
56,283
242,431
8,429,033
$
5,932,258
1,094,005
773,539
101,647
333,085
9,783
8,244,317
$
CURRENT PROPERTY TAX
INTERGOVERNMENTAL REVENUE
LICENSE, PERMITS & FINES
INVESTMENT EARNINGS
CHARGES FOR CURRENT SERVICES
OTHER REVENUES
FRANCHISE FEES
TOTAL REVENUES
6.89%
-8.370/0
-6.270/0
1.580/0
7,105,966
3,205,375
69,080
10,380,421
6,647,670
3,498,024
73,700
10,219,394
6,455,777
3,144,839
149,683
9,750,299
6,291,222
2,780,197
82,186
9,153,605
6,259,361
2,400,725
276,306
8,936,392
-29.94%
6.360/0
-11.760/0
6.330/0
(944,500)
9,435,921
15,000
9,450,921
(1,348,106)
8,871,288
17,000
8,888,288
(1,344,231)
8,406,068
537,493
8,943,561
(1,321,365)
7,832,240
313,408
8,145,648
(1,265,183)
7,671,209
161,600
7,832,809
SALARIES AND EMPLOYEE BENEFITS
MATERIALS, SUPPLIES AND SERVICES
CAPITAL OUTLAY
TOTAL
LESS EXPENDITURES CHARGED TO
OTHER ACTMTIES
NET TOTAL
OTHER FINANCING USES
TOTAL EXPENDITURES
Current Expenses
4,311.195
$
4,311.195
$
239,899
4,311.195
$
283,385
4,071,296
$
411,508
3,787,911
$
CHANGE IN FUND BALANCE
Total Fund Balance
/
CITY OF HOPKINS
ANALYSIS OF TAX LEVY
2007
Proposed
Levy
$7,728,711
2006
$7,164,263
2005
$7,261 ,263
2004
$6,654,321
2003
$6,167,437
2002
$6,137,325
~url!ose
General Operations
General Fund
Oth r Levi s:
$11,815
$50,000
$20,000
$7,810,526
$11,815
$25,000
$20,000
$7,221,078
$11,815
$25,000
$10,000
$7,308,078
$11
815
$0
$0
$6,666,136
$11,815
$0
$106,000
$6,285,252
$11,815
$0
$100,000
$6,249,140
$175,000
$147,000
$885,000
$180,000
$147,000
$890,000
$190,000
$147,000
$475,000
$210,000
$150,000
$678,000
$190,000
$143,000
$550,000
$215,000
$127,000
PERA Levy
Capital Levy
HRA Levy
Total G neral Levy *
Sp cial L vies:
GO Bonds
Improvement Bonds
HRA Revenue Bonds
$1,207,000
$9,017,526
$1,217,000
$8,438,078
$812,000
$8,120,078
$1,038,000
$7,704,136
(2)
$883,000
$7,168,252
(1 )
$342,000
$6,591 ,140
Special Levies
TOTAL LEVIES
Subtotal
$579,448
6.87% I
I
$318,000
3.92%
$415,942
5.40%
$535,884
7.480/0
$577,112
8.76%
$1,578,779
31.50%
Total
over prior year
rc ntag Incr (Deer)
as
Incr
P
47.299%
-1.9950/01
r
48.262%
-1.393%
48.944%
-13.624%
56.664%
1.007%
56.099%
4.167%
53.855%
67.914%
n Tax Capacity Rate
Tax Capacity Rate
Perc ntag Incr/Decr
Notes
* Included in Operating Levy on Tax Statements
(1) First portion of new facility bonds levied
(2) Second portion of new facility bonds and no LGA
CITY OF HOPKINS
INCLUDES GENERAL FUND, DEBT SERVICE, HOUSING & REDEVELOPMENT and PERA
HISTORIC, cuRRENT AND PROJECTED TAX LEVIES AND CITY TAX RATES
Levy Total Levy Fiscal Disp Net Tax Tax GroSS
Payable Tax General PERA Capital HRA Debt Before Distribution After Capacity Tax Levy
~ ~paci!Y l&YY .lax LeVL l&YY IaxLe~ 3axLeVY~ gedits hlDolla1]. flscal Dispar Rate Increase
- - - -
2007 17,026,722 7,728,711 11,815 50,000 20,000 1,207,000 9,017,526 964,012 8,053,514 47.2990/0 6.870/0
2006 15,622,197 7,164,263 11,815 25,000 20,000 1,217,000 8,438,078 898,980 7,539,098 48.262% 3.92%
2005 14,655,800 7,261,263 11,815 25,000 10,000 812,000 8,120,078 48.944% 5.40%
2004*** 11,901,703 6,654,321 11 ,815 - - 1,038,000 7,704,136 56.664% 7.48%
2003** 11,140,721 6,167,437 11,815 - 106,000 883,000 7,168,252 56.099% 8.76%
2002* 10,658,607 6,137,325 11,815 - 100,000 342,000 6,591,140 53.855% 9.78%
2001 13,451,366 5,661,993 342,000 6,003,993 32.073% 6.00%
2000 12,526,355 5,334,144 330,000 5,664,144 32.112% 5.23%
1999 11,749,302 5,052,640 330,000 5,382,640 32.441% 3.63%
1998 11,936,742 4,864,184 330,000 5,194,184 30.452% 0.30%
1997 13,194,123 4,439,137 739,663 5,178,800 27.648% 1.21%
1966 12,902,081 4,538,426 578,574 5,117,000 28.540% 3.30%
1995 12,981,406 4,379,653 573,947 4,953,600 27.042%
* NO HACA
** First portion of new facility bonds levied
"'LeVY for second portion of new facility bonds and nO local government aid,
In 2002 the legislature removed flACA from the aids to local governments and reallocated it to school districts,
In 2003 the city implemented the initial debt service levy to pay for the facility projects,
In 2004 the legislature eliminated local government aids to the City of HopkinS
In 2005 the Limited Market Value Credit is being gradually phased out,
FYJl'l' V A.LuB l'R01oA 2003 'f0 2()04
A.SSU1oABS A. l5% TNCRBhSE TN ~FYJl'l' V A.LuB FR010A 2004 'f0 2005
A.SSU1oABS A. l5% TNCRBA.SE TN ... FYJl'l' V ,\LUE FR010A 2005 'f0 2006
A.SSU1oABS A. 6.2% TNCRB"'SE TN lVU'
City Increase
2006 'ta1les over 1\nnual
%
Market -payable -previouS
~~~ ~
$826 $49 5.9%
$l'14,600
$1,092 $65 5.9%
$230,922
$345,445 $1,634 $91 5.9%
$2,469 $146 5.9%
$521,922
$69 $4
$91 $5
$136 $8
$206 $12
CI't'Y Of 1l01'lZl~S
ES'flW- 'fED \'RO\'ER'f'i 'fN' ]}A\' A.crS FOR Cn)' LEV)"S
RBS\DEN'flfJ.- ,\\OWlS'fEA.D \'RO\'ER'f'i
City Increase
2005 'taKes over 1\nnual
1\nnual 1>ayable 1>reviouS %
% Market ~
~ ~~~
$111 $11 10.0%
~0.6% $164,401
$1,028 $102 10.0%
~0.6% $211,441
$1,531 $153 10.0%
~0.6% $325,211
$2,323 $231 10.0%
~0.6% $491,452
$65 $6
$86 $9
$128 $\3
$194 $19
City Increase
2004 'ta1les over
Market 1>ayable 1'reviouS
Value 2005 ~
~~
$142,962 $100 ~$5
$189,019 $925 ~$6
$282,850 $1,384 ~$9
$421,349 $2,091 ~$14
1oA0N"tlU.s CoS'f Of LEV)' $58
1oA0N'ffll.)' COS'f Of LE'l'i $11
1oA0N'fl\L)' COS'f Of LEV'l $115
1oA0N'fl\L)' COS'f Of LEV)' $l'14
, ' _arl<et "alne for aU \udi"idnals resideuce,
d' OU tbe actnal ",.reaSe '" ~
^ctnal tall. \nll'aets Jl\\l)' "art del'eu \U\l, nl'
\
City Increase
2006 T""es ovet
M",ket PaJoh\e Pt~\OUS
~~~
$\91.913 $\,S\% $\S6
$2,829 $265
$660
\
\
^nt\ua\
%
~
1\.4%
CI'f'l OF flOPlZI'NS I
AJ.. flAP l\ers fOR Cl'T'i LEY'l s
ESTU,\J\ TED PROPER'T'i ~'DtJS1'R1AL PROPBR1'~
COMMBRCI^L ~ )X..
\0:3%
9.5%
9:3%
$1,320
$\3
$22
$55
$1\0
$1,513
$\5,502
$121
$236
$631
$ \ ,292
$336,554
$838,086
$1,616,\13
Annua\
%
~
3.0%
2.3%
\.9%
\.1%
City Increase
200S T""es over
M.,ket pa)'lll>\e l'tO'l\ous
"'1_1 2006 ~~
~~--
$\%\,621 $\,362 $40
$2,564 $59
$\21
$242
$6,9\3
$14,\8\
$308,165
$168,886
$\,531,113
City Increase
^nt\ua\
2004 T""es over
. %
Matket pa)lOl>\e l'tev\Ous
200S 'leat ~
~ ~ .-:-=- --
23 41:'\ \2 ~1.8%
$\12,649 $\,3 ..
$2,S06 .$23\ .%5%
~8.9%
~$662
$293,503
$6,186
$3
$5
$11
$20
$1\4
$214
$516
$\,\82
~9.0%
~$\,382
$13,940
$130,88\
$\,461,161
, ' """ko\ value fot a ~ific business,
d' on tbe actua!11\CteaSe 11\ ' .
Mtual tal'- i11ll""'ts roaJ var'j del"'" \ng f 1\ cotnl11etCial bUsinesses \n 1l.0\,\a11ll.
1'\1e ",."ease used fot 200410S is t\1e average 0 a
\ . and ty1>e of business.
M",ket value \s d~da11t on t\1e ocat'on
~ V l\L\Jb fROM 2003 TO 2004
l\SSmAES l\ S .2% lNCRlll\SE IN Ml\ FJOlT V l\L\Jb fROM 2004 TO 2005
l\SSmAES l\ S.2,/,lNCRbl\SE IN M~"I\T V j\L\Jb fROM 200S TO 2006
l\SsmAES l\ 9'/' lNcREl\SE IN }AP..""
$1\0
$209
$566
$1,162
MONT\lL'l COST Of LEY'l
MON'f\\L'l COST Of LEY'l
MON'f\\L'l COST Of LEY'l
MON'fll.L'l COST Of LEY'l