CR 09-067 Approve Proposed 2010 Levy, Proposed 2010 General Fund Budget and Set Budget Meeting DateAugust 27, 2009
City of Hopkin8 Council Report 2009 -067
APPROVE PROPOSED 2010 LEVY,
PROPOSED 2010 GENERAL FUND BUDGET
AND SET BUDGET MEETING DATE
Proposed Action
Staff recommends adoption of the following motions:
Move to approve Resolution 2009 -043 "Approving proposed 2010 tax levy, debt service levies at levels under those
required in the bond covenants, proposed 2010 general fund budget, and setting budget meeting dates ".
Adoption of resolution 2009 -043 will set a maximum tax levy for 2010, will set debt levies at amounts sufficient to
pay debt service requirements taking into consideration other revenue sources and fund reserves, and approve a
proposed 2010 general fund budget. Actual budget and tax levy adoption will not occur until December 2009.
Overview
For 2010 the Truth in Taxation process has been suspended, however the City is still required to certify a proposed tax
levy and submit it to the county by September 15 What is changed is the removal of the requirement for a public
hearing. In its place is a requirement to hold a meeting where the council discusses the budget and public comments
are taken. This can be at a regularly scheduled council meeting. The date, time and place of the meeting must be
announced at the council meeting. Staff is suggesting December 1, 2009 as an appropriate date to discuss the budget.
This will allow us to take into consideration comments from the public prior to adopting the budget on December 15.
A proposed general fund budget has been established and is attached for your review. Adoption of the actual budget
will occur in December 2009 following the public comment meeting, 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 2010 and set the
preliminary levy. Levy limits were reinstated for 2009 through 2011.
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, and to set budget meeting dates as set forth in
the resolution.
Primary Issues to Consider
Legislative impacts
2010 budget concerns
Supporting Information
Power point presentation slides
2010 proposed general fund budget
Resolution 2009 -043
Christine M. Harkess. CPA, CGFM
Finance Director
Financial Impact: $ 10,194,000 Budgeted: Y/N X N Source: Taxes and other revenues
Related Documents (CIP, ERP, etc.): 2010 budget Notes:
^
Staff Analysis
2009 Legislative Actions
Local government aid (LGA), a property tax relief program to cities, that ensures residents have access to basic
services, regardless of where in Minnesota they live, was unallotted for 2009 and 2010 and impacts the city of
Hopkins. The City of Hopkins receives $50,000 in LGA, which is earmarked for the Hopkins Center for the Arts.
Market Value Homestead Credit (MVHC), a state -paid property relief program for owners of certain qualifying
homestead property remains in place for homeowners, however the state has unallotted the city's reimbursement for
2009 and 2010. This results in a loss of tax revenue of $245,520 for 2009 and of $244,667 for 2010. Adjustments
were made to the 2009 budget as a result of the unallotment and we are currently working to fill the gap in 2010 that
this loss in tax revenue has caused.
Levy limits last repealed for 2005 were reinstated for the years 2009 -2011.
• 2010 Levy
The City of Hopkins is proposing a total tax levy increase of $372,571 or 3.9 %. The tax levy proposed totals
$9,925,685 which includes levies for the general fund, PERA increases, MVHC unallotment (partial) and bonded
debt. Details are included in the attached summary of tax levy.
The debt levy for 2010 does not have any new debt issues included. The Housing and Redevelopment Authority levy
for 2010 is a continuation of the reinstatement of their past levy authority, however it remains at a significantly
reduced level. The HRA levy is a separate levy that is shown separately on the tax statements under "Other Taxing
Districts ". The capital levy implemented in 2005 has been suspended for 2010 to assist in balancing the General Fund
budget.
2010 Budget Analysis
The 2010 general fund budget, and the 2010 general operating tax levy are proposed at $10,194,000 and $8,658,685,
respectively. The proposed levy is set at maximum amount and can only be reduced. Staff has spent a considerable
amount of time refining original budget requests to obtain the most responsible budget and tax levy. The general fund
budget is currently proposed to increase by $118,508 or 1.18% over the 2009 budget and it is not yet balanced with
available revenues. Staff continues to work to close this funding gap. Expenditures are at a very modest increase for
2010 and with the exception of one union agreement that is in its last year salaries are budgeted at 0% increase. Most
other expenses are budgeted at levels at or less than 2009. In addition, several vacant positions are being left
temporarily vacant as we re- assess the status of the budget.
Because we are a service related operation, salaries and benefits compose 78% of current general fund expenditures
and any labor negotiations have a tremendous impact on the budget, however as mentioned above we have budgeted
for a 0% wage increase. 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 2010 general fund budget
revenues and expenditure requests.
Tax Impacts of Levy's
Attached you'll find the proposed levy impacts for residential property..
Previously when levy limits were in place the City Council historically has set the proposed levy amount at the State's
recommended levy limit. After four years without levy limits they have been reinstated for 2009. This has presented
challenges in establishing a 2010 budget; however staff is recommending based on council input, that the Council set
the proposed levy with a maximum 3.9% increase which is an amount that we feel is responsible given this economy.
2009 Budget Meeting for the 2010 Budget and 2010 Tax Levy
The 2009 Legislature has made significant changes to the truth -in- taxation (TNT) requirements, essentially abolishing
the old scheme. The new law now requires that on or before September 15 at the regularly scheduled meeting at
which the city council adopts a proposed tax levy, the city council must also announce:
The time and place of the council's next regularly scheduled meetings at which the budget and levy will be
discussed and must not be held before 6 pm.
The date and time of the regularly scheduled meeting at which a final budget and levy will be determined.
That the public will be allowed to speak at these subsequent meetings.
On or before September 15 the time as place of regularly scheduled meetings dealing with the budget and levies
must be included in the minutes and published in the official newspaper as required by law.
Therefore, staff is recommending the City Council budget meeting date for December 1, 2009 and adoption of the
final budget to be at the December 15, 2009 council meeting.
City of Hopkins
Legislative changes effecting
local governments
• Local Government Aid (LGA)
• $50,000 earmarked for the Arts Center
• Unallotted for 2009 & 2010
• Market Value Homestead Credit (MVHC)
• Unallotted for 2009 & 2010
• Levy limits in place for 2009 to 2011.
• No levy limits in 2005 -2008
Why do levies go up?
• Increased spending and /or decreases in non
tax revenue sources
• Spending may increase for several reasons
• Inflationary increases
• Additional or enhanced programs
• Infrastructure improvements
• New debt levies
• Non tax revenue sources may decrease
• Slow economy
• Reduction in government aids
• Reduced revenues due to economic factors
• Reduced interest earnings
Truth and Taxation Process
Process has changed for 2009
• Council adopts a proposed levy.
• Council sets budget meeting dates to discuss
budget and receive public comments
• Recommended budget meeting dates
• Budget Meeting — Tuesday, December 1st
• Budget Approval — Tuesday, December 15th
City Planning
• City council and staff have been meeting and
discussing options for maintaining a balanced
budget to 2010 and beyond
• Options include budget cuts, use of
reserves, taxes and new revenue sources.
• The 2010 General Fund budget details will be
outlined prior to adoption of the final budget and
levy in when we hold our budget meeting in
December 2009.
How do levies go down?
• The city may reduce its tax levy by decreasing
costs or increasing non tax revenue sources
• To decrease costs the city could eliminate
programs or services it currently provides to the
citizens.
• The city may also outsource certain city
services at a lower cost
• Increased revenues are derived primarily from
new fees and increased charges for services
• The City may receive grants for specific
programs
1
What are our tax needs?
■ The 2010 preliminary levy
• Levy set at $9,925,685
■ Proposed increase of $372,571 or
3.9% over the 2009 levy.
• The increase is primarily a result of
decreases in revenue sources and
unallotment of MVHC
• Expenditures increased only 1.18%
2010 Proposed General Fund Budget
and 2010 Preliminary Lev
2010 General Fund Budget
$10,194,000
This is a increase over last
years budget of 1 18 %.
The increase is due to
inflationary increases.
2010 Levy
$9,925,685
This is an increase over
last years levy of
$372,571 or 3.9%
Increase is due primarily
to loss of revenue
Budget Impacts
• 0% wage increase
• Delayed hiring of staff vacancies
• Outsourcing of services
• No capital expenditures
• Reorganization of the joint recreation program
• Reallocation of staff salaries to other funds
based on evaluation of time
• Election year
Tax Levy Options
• The levy set this evening will be the
maximum levy for 2009.
• Levy can be reduced but it cannot be
increased.
• Staff continues to evaluate the budget
and the final levy and budget may
include additional reductions.
Budget Challenges
• Revenue gap of $141,612 remains
• Unallotment of MVHC - $244,667
• Unallotment of LGA - $50,000
• Decreased permit fees due to economy
• Decreased property values
Development and Taxes
• City property taxes for 2010 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
• One tax increment district will be decertified in 2009 and
another in 2011
• Additional projects in the planning stages will add to
the city's tax base for 2011 and beyond
2
Department
Intergovernmental Revenue
PERA Aid
Police - Federal Grant
Police - State Aid
Police - POST Reimbursement
Police - Misc Grants
Police - 911 Service Fee
Fire - State Aid
Fire - County
PW - State Aid
Licenses, Permits & Fees
Court Fines
Building Permit & Inspection Fees
Business Licenses
Administrative Citations
Liquor , Animal Licenses & Penalties
Fire Licenses & Permits
PW - Licenses & Permits
P &Z - License & Permits
CITY OF HOPKINS
PROPOSED GENERAL FUND REVENUE BUDGET
2009
2009 Budget 2010
Budget Amended Budget
Property Taxes & PERA Special Levy 8,229,114 7,983,594 8,458,018
Transfer of Capital Levy 0 50,000 0
20,510
1,000
170,000
9,500
4,000
20,000
107,000
4,000
112,000
20,510
1,000
170,000
9,500
4,000
20,000
107,000
4,000
112,000
(Total Intergovernmental Revenue
448,010 448,010 433,0101
160,000
514,315
7,500
3,500
103,500
4,100
8,070
4,000
160,000
514,315
7,500
3,500
103,500
4,100
8,070
4,000
20,510
0
170,000
9,500
4,000
24,000
85,000
0
120,000
135,000
366,935
7,500
3,500
103,400
5,300
8,275
3,000
1Total Licenses, Permits & Fines
804,985 804,985 632,9101
Charges for Service
Finance Department
Municipal Building
Assessing
City Clerk
Inspections
Police
Fire
Public Works
Activity Center
Planning & Zoning
'Total Charges for Service
Miscellaneous Revenue
Franchise Fees
Finance Department
Elections
Police
Fire
Public Works
Acitivty Center
1Total Miscellaneous Revenue
4,200 4,200 4,700 11.90%
2,400 2,400 2,400 0.00%
1,000 1,000 1,000 0.00%
8,500 8,500 500 - 94.12%
56,000 56,000 32,450 - 42.05%
43,000 43,000 43,500 1.16%
10,000 10,000 6,200 - 38.00%
1,200 1,200 2,250 87.50%
50,000 50,000 46,000 -8.00%
300 300 50 - 83.33%
176,600 176,600 139,050 I - 21.26% 1.38%
290,000 290,000 290,000 0.00%
4,800 4,800 4,800 0.00%
0 0 0
1,000 1,000 500 - 50.00%
0 0 0
2,200 2,200 2,100 -4.55%
13,000 13,000 17,000 30.77%
311,000 311,000 314,400 I 1.09%
'Interest Earnings
105,783 105,783 75,000
lrotatilev n ,e
$, . 0;879,972. 110,082,388 .I
Incr /(Decr) of total
2.78% 84.14%
0.00%
- 100.00%
0.00%
0.00%
0.00%
20.00%
- 20.56%
- 100.00%
7.14%
-3.35%
- 15.63%
- 28.66%
0.00%
0.00%
-0.10%
29.27%
2.54%
- 25.00%
- 21.38%
- 29.10% 0.75%
-0.23%
4.31%
6.30%
3.13%
1 100.00 %I
Department
City Council
City Council
Health & Wellness
Administrative Services
Administration
Personnel
Wellness
Information Services
Finance
Budget
Debt Management
General Accounting
Payroll
TIF Administration
Utility Billing
'Total Finance
City Clerk
City Clerk
Records Management
Elections
CITY OF HOPKINS
PROPOSED GENERAL FUND EXPENDITURE BUDGET
2009
2009 Budget 2010 Budget %
Budget Amended Budget Incr /(Decr)
76,572 73,572
1,500 1,500
'Total City Council
78,072 75,072 73,1471
71,647 -6.43%
1,500 0.00%
-6.31 %
161,355 158,855 160,450 -0.56%
59,285 59,285 42,749 - 27.89%
2,050 2,050 2,000 -2.44%
229,381 228,181 228,115 -0.55%
-4.15%
'Total Administrative Services 452,071 448,371 433,314 I
23,514 23,514 22,472 -4.43%
0 0 0 #DIV /0!
115,173 113,673 118,753 3.11%
48,381 48,381 45,314 -6.34%
0 0 0 #DIV /0!
2,809 2,809 3,500 24.60%
189,877 188,377 190,039 I 0.09%
'Legal
130,625 130,625 135,000 I
'Municipal Building
308,809 300,556 306,2841
'Receptionist
45,893 45,893 46,5761
1Assessing
167,288 . 167,288 168,0651
27,833 27,833
26,783 26,783
43,203 43,203
19,289
31,323
59,605
'Total City Clerk
97,819
97,819 110,217 I
3.35%
-0.82%
1.49%
0.46%
- 30.70%
16.95%
37.96%
12.67%
Inspections
Building Code Inspections 270,109 269,709 267,116 -1.11%
Fire Inspections 44,389 44,389 37,036 - 16.56%
Heating & Plumbing Inspections 83,932 83,857 88,614 5.58%
Housing Inspections 118,811 118,486 124,603 4.87%
Restaurant & Hotel Inspections 24,255 24,255 23,196 -4.37%
Misc. Community Inspections 51,421 51,221 59,140 15.01%
'Total Inspections 592,917 591,917 599,7051 1.14%
Police
Police Administration 478,165 476,565 485,606 1.56%
Patrol 2,288,247 2,288,247 2,347,741 2.60%
Heat Team 71,048 71,048 72,055 1.42%
Reserves 32,183 32,183 33,652 4.56%
Investigations 483,330 483,330 491,723 1.74%
Metro Drug Task Force 101,196 101,196 103,174 1.95%
Pawn Shop 3,354 3,354 3,374 0.60%
Department
Outreach
Dispatch
Reception- Records
Systems Management
'Total Police
Fire
Fire
Emergency Preparedness
(Total Fire
Public Works
PW Building
Equipment Services
Administration
Engineering
Street & Alleys
Snow & Ice Removal
Parks
Tree Service
Recreation
Playground
Ice Rink
Park Service
Joint Recreation
Skate Park
Activity Center
Act Ctr - Community Use
Act Ctr - Maintenance
Planning & Zoning
Zoning Activities
Sign & Fence Permits
Miscellaneous Planning
ITotal Planning & Zoning
Other Financing Uses
Transfer to Para transit Fund
Revenues Over (Under) Expendirues $
2009 Budget
Budget Amended
69,495 69,495
471,793 471,793
253,201 253,201
75,433 75,433
4,327,445 4,325,845
805,244
5,677
810,921
49,704
64,689
26,641
134,874
892,619
181,688
566,615
223,117
'Total Public Works
2,139,947 2,036,089 2,203,4751
21,748
13,800
12,500
159,000
7,925
262,947
65,462
64,738
10,013
27,155
101,906
788,695
5,677
794,372
47,503
61,189
26,641
134,874
833,619
180,746
556,615
194,902
21,748
13,800
12,500
144,000
7,925
63,238
10,013
27,155
100,406
15,000 15,000
2010 Budget %
Budget Incr /(Decr)
76,120 9.53%
497,704 5.49%
249,099 -1.62%
67,668 - 10.29%
4,427,916 I 2.32%
788,666 -2.06%
5,851 3.06%
794,5171 -2.02%
46,561
74,933
23,464
137,666
877,402
215,260
616,467
211,722
19,722
12,475
12,811
145,000
7,632
(Total Recreation
214,973 199,973 197,640 I
261,848 264,394
65,462 62,024
(Total Activity Center
328,409 327,310 326,4181
64,614
10,081
46,992
121,687 I
'Tuition Reimbursement
13,520 13,520 10,000 1
;000;492 9,843,43'3 10;144,000
0
(Total Other Financing Uses
15,000 15,000
oI
'Contingency
60,000
50,000 I
I Gra O d Totalw,w
0,194,000 I
' R ev e Ia E s ,
$101i: ,49 $ ,9,879,972 $10,052,388
$ 21,539 $ (141,612)
-6.32%
15.84%
- 11.93%
2.07%
-1.70%
18.48%
8.80%
-5.11%
2.97%
-9.32%
-9.60%
2.49%
-8.81%
-3.70%
-8.06%
0.55%
-5.25%
-0.61%
-0.19%
0.68%
73.05%
19.41%
- 26.04%
1.44%
- 100.00%
- 100.00%
- 16.67%
1.18%
'��
RESOLUTION APPROVING THE PROPOSED 2010 TAX LEVY, SETTING
DEBT SERVICES LEVIES AT LEVELS UNDER THOSE REQUIRED IN THE BOND
COVENANTS, APPROVINGTHE PROPOSED 2010 BUDGET, AND
SETTING BUDGET MEETING DATE
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF HOPKINS, MINNESOTA,
That the following sums be levied for 2010 upon the taxable property in the City of Hopkins, for
the following purposes.
General Levy
General Fund
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 2009-043
Special Levies
PERA Rate Increase 35,500
MVHC Unallotment 239,175
Debt Levies
2001 GO Refunding Bonds — Park & Recreation 108,000
2002E GO Improvement Bonds 59,000
2003 HRA Lease Revenue Bonds 200,000
2007A GO Capital Improvement Bonds 715,000
2007B GO Improvement Bonds 185,000
Subtotal Special Levies
$8,384,010
1,541,675
Total Levy 89,925,685
HRA/EDA Levy
Housing & Redevelopment Authority Levy $ 75,000
That based upon staff analysis of specials assessments currently levied for Permanent
Improvement Bonds, alternative revenue sources for the Capital Improvement Bonds and available
reserves within all debt service funds listed below that the debt service levies for 2010 for the following
issues be levied at amounts less than that provided by the bond covenants.
Bond Issue
$ 820,000 G.O. Refunding Bonds of 2001 — Park & Rec of 1992
$ 960,000 G.O. Permanent Improvement Revolving Bonds of 2002B
$9,920.000 G.O. Capital Improvement Bonds of 2007A
That the Proposed 2010 General Fund Budget be set at $10,194,000.
Net Debt
Service Levy
$108,000
$ 59,000
$715,000
That budget meeting to discuss the 2010 budget and tax levy be set for December 1, 2009 and that the date the fin4l
budget and levy will be adopted be set as December 15, 2009. Both meetings will be held at 7:30 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 1 day of September 2009.
ATTEST:
Terry Obermaier, City Clerk
By
Eugene Maxwell, Mayor