CR 10-094 Approve Proposed 2011 Levy, Proposed 2011 General Fund Budget & Set Budget Meeting DateSeptember 7, 2010 City of KOpkim Council Report 2010-094
APPROVE PROPOSED 2011 LEVY,
PROPOSED 2011 GENERAL FUND BUDGET
AND SET BUDGET MEETING DATE
Proposed Action
Staff recommends adoption of the following motions:
Move to approve Resolution 2010-049 "A
Mroving proposed 2011 tax levy, debt service levies at levels under those
required in the bond covenants, proposed 2011 general fund budget, and setting budget meetingdates".
Adoption of resolution 2010-049 will set a maximum tax levy for 2011, 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 2011 general fund budget. Actual budget and tax levy adoption will not occur until December 2010.
Overview
Again for 2011 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 15th. What changed in 2010 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 7, 2010 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 21St
A proposed general fund budget has been established and is attached for your review. Adoption of the actual budget
will occur in December 2010 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 2011 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
• 2011 budget concerns
Supporting Information
• Power point presentation slides
• 2011 proposed general fund budget
• Resolution 2010-049
Christine M. Harkess. CPA, CGFM
Finance Director
Financial Impact: $ 10,299,327 Budgeted: Y/N X N Source: Taxes and other revenues
Related Documents (CIP, ERP, etc.): 2011 budget Notes:
Staff Analysis
• 2009/2010 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.
LGA for 2011 remains in the state's budget and the City is expected to receive $50,000 again in 2011.
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, 2010 and 2011. This results in a loss of tax revenue of $245,520 for 2009, $244,667 for 2010 and $232,850 for
2011. Adjustments were made to the 2009 budget as a result of the unallotment, the 2010 and 2011 unallotments were
allowed as a special levy to recoup some of the lost revenue.
Levy limits last repealed for 2005 were reinstated for the years 2009-2011.
• 2011 Levy
The City of Hopkins is proposing a total tax levy increase of $212,729 or 2.14%. The tax levy proposed totals
$10,138,414 which includes levies for the general fund, PERA increases, MVHC unallotment and bonded debt.
Details are included in the attached summary of tax levy.
The debt levy for 2011 has a provision for the new debt issue that will be sold in October. This will replace in a
slightly lesser amount a debt levy that was retired in 2010. The Housing and Redevelopment Authority levy for 2011
is a continuation of the reinstatement of their past levy authority. 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 that was
suspended for 2010 has been reinstated for 2011.
• 2011 Budget Analysis
The 2011 general fund budget, and the 2011 general operating tax levy including a provision for delinquent taxes is
proposed at $10,299,327 and $8,863,414, respectively. The proposed levy is set at maximum amount and can only be
reduced. The general fund budget is currently proposed to increase by $226,124 or 2.24% over the 2010 budget is
balanced with a combination of available revenues and use of budget reserves from 2009. Expenditures are at a very
modest increase for 2011 and include a modest wage increase for most employees. Most other expenses are budgeted
at a constant level. In addition, one open position is being left temporarily vacant as we re -assess the demands of that
department.
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. 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 2011 general fund budget revenues and expenditures.
• 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 were reinstated for 2009. This has presented challenges
in establishing a 2011 budget; however staff is recommending based on council input, that the Council set the
proposed levy with a maximum 2.14% increase which is an amount that we feel is responsible given this economy.
• 2010 Budget Meeting for the 2011 Budget and 2011 Tax Levy
The 2009 Legislature 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 15th at a 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 15th, 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 7, 2010 and adoption of the final
budget to be at the December 21, 2010 council meeting.
Legislative changes effecting
local governments
■ Local Government Aid (LGA)
c $50,000 earmarked for the Arts Center
Unallotted for 2009 & 2010
Back in for 2011
■ Market Value Homestead Credit (MVHC)
m Unallotted for 2009, 2010 & 2011
■ 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
s Spending may increase for several reasons
13 Inflationary increases
t::i Additional or enhanced programs
Infrastructure improvements
New debt levies
■ Non tax revenue sources may decrease
r.:3 Slow economy
Reduction in government aids
a Reduced revenues due to economic factors
r1 Reduced interest earnings
Truth and Taxation Process
Process changed in 2009
■ Council adopts a proposed levy.
■ Council sets budget meeting dates to
discuss budget and receive public
comments
■ Recommended budget meeting dates
t::t Budget Meeting — Tuesday, December 7th
n Budget Approval — Tuesday, December 21 st
City Planning
r City council and staff have been meeting and
discussing options for maintaining a balanced
budget in 2011 and beyond.
■ Options include budget cuts, use of
reserves, taxes and new revenue sources.
■ The 2011 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 2010.
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.
r The City may cancel or delay capital projects
a Increased revenues are derived primarily from
new fees and increased charges for services.
in The City may receive grants for specific
programs.
1
What are our tax needs?
■ The 2011 preliminary levy
• Levy set at $10,138,414
• Proposed increase of $212,729 or 2.14%
over the 2010 levy.
• The increase is primarily a result of
decreases in revenue sources and
unallotment of MVHC
■ Expenditures will increase 2.24%
Budget Impacts
• Reduced spending across all
departments
■ Delayed hiring of staff vacancies
■ Reduced capital expenditures
■ Focus on savings and efficiencies
Tax Levy Options
■ The levy set this evening will be the
maximum levy for 2010.
• 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
■ Unallotment of MVHC - $232,850
• Decreased building permit fees due to
economy
■ Decreased interest income
• Flat or decreasing property values
Development and Taxes
• City property taxes for 2011 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.
Decertified TIF District 2-1
':i Added over $500,000 to the tax base
■ Additional projects in the planning stages will add to
the city's tax base for 2012 and beyond.
2
2011 Proposed General
Fund Budget
and 2011 Preliminary Levy
2011 General Fund
2011 Levy
Budget
$10,138,414
$10,299,327
This is a increase over
This is an increase over
last years budget of
last years levy of
2.24%
$212,729 or 2.14%.
The increase is due to
Increase is due primarily
inflationary increases.
to loss of revenue
Budget Impacts
• Reduced spending across all
departments
■ Delayed hiring of staff vacancies
■ Reduced capital expenditures
■ Focus on savings and efficiencies
Tax Levy Options
■ The levy set this evening will be the
maximum levy for 2010.
• 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
■ Unallotment of MVHC - $232,850
• Decreased building permit fees due to
economy
■ Decreased interest income
• Flat or decreasing property values
Development and Taxes
• City property taxes for 2011 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.
Decertified TIF District 2-1
':i Added over $500,000 to the tax base
■ Additional projects in the planning stages will add to
the city's tax base for 2012 and beyond.
2
Fiscal Disparities
■ Changes in the Fiscal Disparities Program affects the
tax rate for Hopkins properties.
Net
Year Contribution Distribution Gain/(Loss)
2011 3,324,078
2,645,025
(679,053)
2010 2,858,921
2,913,208
54,287
2009 2,766,202
2,840,070
73,868
2008 2,450,063
2,405,483
(44,580)
2007 2,116,466
1,997,455
(119,011)
2006 1,952,996
1,836,753
(116,243)
2005 1,526,509
1,673,106
146,597
2011 Preliminary Budget
and Tax Levy
Questions ??
Financial Impacts
■ Arts Center debt paid off 8 years early
■ Construction project bids have been very
favorable due to low bids
■ New bonds issued have low interest rates
Recent and planned bond refundings have
saved us over $535,000 in interest expense
3
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 2010-049
RESOLUTION APPROVING THE PROPOSED 2011 TAX LEVY, SETTING
DEBT SERVICES LEVIES AT LEVELS UNDER THOSE REQUIRED IN THE BOND
COVENANTS, APPROVINGTHE PROPOSED 2011 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 2011 upon the taxable property in the City of
Hopkins, for the following purposes.
General Lev
General Fund $8,639,064
Special Levies
PERA Rate Increase
35,500
MVHC Unallotment
222,850
Debt Levies
2002B GO Improvement Bonds
59,000
2003 HRA Lease Revenue Bonds
200,000
2007A GO Capital Improvement Bonds
710,000
2007B GO Improvement Bonds
172,000
2010 GO Improvement Bonds
100,000
Subtotal Special Levies
1,499,350
Total Levy X10,138,414
HRA/EDA Levy
Housing & Redevelopment Authority Levy 125,000
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 2011 for the
following issues be levied at amounts less than that provided by the bond covenants.
Net Debt
Bond Issue Service Levy
$ 960,000 G.O. Permanent Improvement Revolving Bonds of 2002B $ 59,000
$9,920.000 G.O. Capital Improvement Bonds of 2007A $715,000
$1,955,000 G.O. Improvement Bonds of 2007B $172,000
That the Proposed 2011 General Fund Budget be set at $10,299,327.
That the budget meeting to discuss the 2011 budget and tax levy be set for December 7, 2010 and that
the date the final budget and levy will be adopted be set as December 21, 2010. 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 7`" day of September 2010.
Lo
ATTEST:
Terry Obermaier, City Clerk
Eugene Maxwell, Mayor
CITY OF HOPKINS
2011 PROPOSED TAX LEVY
Increase over prior year
Percentage Incr (Decr) -Total
$ 358,734 $ 372,571 $ 212,729
3.90% 3.90% 2.14%
Tax Capacity Rate 47.315% 48.999% 55.673%
2011
Net Levy
Purpose
2009
2010
Proposed
General Operations
General Fund
$ 8,160,614
$ 8,384,010
$
8,539,064
Capital Levy
100,000
-
$
100,000
$
8,639,064
$ 8,260,614
$ 8,384,010
Special Levies:
PERA Levy
35,500
35,500
35,500
MVHC Levy
-
239,175
222,850
$
258,350
Subtotal Special Levies - Other
$ 35,500
$ 274,675
Debt Levies:
1999D GO Perm Impr Revolving Bonds
26,000
-
-
2001 GO Refunding Bonds - Park & Rec
130,000
'108,000
-
2002B GO Improv Revolving Bonds
59,000
59,000
59,000
2003 HRA Revenue Bonds
225,000
200,000
200,000
200713 GO Improv Revolving Bonds
175,000
185,000
172,000
2007 Capital Improvement Bonds
642,000
715,000
710,000
2010A GO Improvement Bonds
-
-
100,000
Subtotal - Debt Levies
$ 1,257,000
$ 1,267,000
$
1,241,000
Subtotal Special Levies
$ 1,292,500
$ 1,541,675
$
1,499,350
TOTAL LEVIES
$ 9,553,114
$ 9,925,685
$10,138,414
Increase over prior year
Percentage Incr (Decr) -Total
$ 358,734 $ 372,571 $ 212,729
3.90% 3.90% 2.14%
Tax Capacity Rate 47.315% 48.999% 55.673%
CITY OF HOPKINS
PROPOSED GENERAL FUND REVENUE BUDGET
2010
2011
%
%
Department Budget
Budget
Incr/(Decr)
of total
Property Taxes & PERA Special Levy 8,714,685
8,863,414
1.71%
86.06%
Intergovernmental Revenue
PERA Aid
20,510
20,510
0.00%
MVHC unallotment
(244,667)
(232,850)
-4.83%
Police - Federal Grant
0
0
0.00%
Police - State Aid
177,715
177,700
-0.01%
Police - POST Reimbursement
9,500
10,000
5.26%
Police - Misc Grants
4,000
4,000
0.00%
Police - 911 Service Fee
24,000
24,860
3.58%
Fire - State Aid
85,000
85,000
0.00%
Fire - County
0
0
-13.92% 5.29%
PW - State Aid
120,000
120,000
0.00%
Total Intergovernmental Revenue
196,058
209,220
6.71% 2.03%
Licenses, Permits & Fees
Court Fines
135,000
135,000
0.00%
Building Permit & Inspection Fees
366,935
283,100
-22.85%
Business Licenses
7,500
7,500
0.00%
Administrative Citations
3,500
6,000
71.43%
Liquor, Animal Licenses & Penalties
103,400
95,900
-7.25%
Fire Licenses & Permits
5,300
5,300
0.00%
PW - Licenses & Permits
8,275
9,490
14.68%
P&Z - License & Permits
3,000
2,500
-16.67%
Total Licenses Permits & Fines
632,910 1
544,790
-13.92% 5.29%
Charges for Service
Finance Department
4,700
5,200
10.64%
Municipal Building
2,500
2,500
0.00%
Assessing
1,000
1,000
0.00%
City Clerk
500
11,100
2120.00%
Inspections
33,450
43,450
29.90%
Police
43,500
43,500
0.006%
Fire
6,200
6,200
0.00%
Public Works
2,250
2,250
0.00%
Activity Center
46,000
46,000
0.00%
Planning & Zoning
50
0
-100.00%
Total Charges for Service
140,1501
161,200
15.02% 1.57%
Miscellaneous Revenue
Franchise Fees
290,000
290,000
0.00%
Unallocated Misc
0
500
Finance Department
4,800
4,800
0.00%
Elections
0
0
Police
500
500
0.00%
Fire
0
0
Public Works
2,100
2,100
0.00%
Acitivty Center
17,.000
17,000
0.00%
Total Miscellaneous Revenue
314,4001
314,9001
0.16%
3.06%
Interest Earnings
75,000
75,000
0.00%
0.73%
Use of 2009 Budg t Savings
-
130,803
1.27%
Total Revenues
$10,073,203
$10,299,327
2.24%
100.00%
CITY OF HOPKINS
PROPOSED GENERAL FUND EXPENDITURE BUDGET
Administrative Services
Administration
2010
2011
Budget%
Department
Budget
Budget
Incr/(Decr)
City Council
2,000
2,000
0.00%
City Council
71,647
71,547
-0.14%
Health & Wellness
1,500
0
--7-1—,5-47-1
-100.00%
Total City Council
73,147
46,576
-2.19%
Administrative Services
Administration
160,450
167,300
4.27%
Personnel
42,749
43,924
2.75%
Wellness
2,000
2,000
0.00%
Information Services
228,115
238,446
4.53%
Total Administrative Services
433,3141
451,670 1
4.24%
Finance
Budget
Debt Management
General Accounting
Payroll
TIF Administration
22,472 23,066
0 0
118,753 129,448
45,314 46,729
0 0
Utility Billing
3,500
4,000
Total Finance
190,039
203,243
19,360
0.37%
Records Management
Legal
135,000
135 000
Elections
59,605
50,222
Munici al Building
306,284
294 818
99,415
-7.91%
Restaurant & Hotel Inspections
Receptionist
46,576
44 172
Misc. Community Inspections
59,140
75,143
lAssessing
168,065 1
167 236
2.64%
9.01%
3.12%
14.29%
6.95%
0.00%
-3.74%
-5.16%
-0.49%
City Clerk
480,256
480,615
0.07%
City Clerk
19,289
19,360
0.37%
Records Management
29,064
29,833
2.65%
Elections
59,605
50,222
-15.74%
Total City Clerk
107,958
99,415
-7.91%
Inspections
480,256
480,615
0.07%
Building Code Inspections
267,116
252,170
-5.60%
Fire Inspections
37,036
38,205
3.16%
Heating & Plumbing Inspections
88,614
90,400
2.02%
Housing Inspections
124,603
134,680
8.09%
Restaurant & Hotel Inspections
23,196
23,309
0.49%
Misc. Community Inspections
59,140
75,143
27.06%
Vacant Property Management
0
2,700
Total inspections
599,705
616,607
2.82%
Police
Police Administration
480,256
480,615
0.07%
Patrol
2,293,453
2,360,705
2.93%
Heat Team
72,055
73,298
1.73%
Reserves
33,652
33,620
-0.10%
Investigations
489,423
499,148
1.99%
Fire
Fire 788,666 833,587 5.70%
Emergency Preparedness 5,851 4,671 -20.17%
Total Fire 794,517 838,258 5.51%
Public Works
2010
2011
Budget%
D partm nt
Budget
Budget
Incr/(D cr)
Metro Drug Task Force
103,174
105,737
2.48%
Pawn Shop
3,374
3,436
1.84%
Outreach
76,320
80,804
5.88%
Dispatch
497,704
526,782
5.84%
Reception -Records
249,099
255,560
2.59%
Systems Management
67,668
64,682
-4.41%
Total Police
4,366,178
4 484 387
2.71%
Fire
Fire 788,666 833,587 5.70%
Emergency Preparedness 5,851 4,671 -20.17%
Total Fire 794,517 838,258 5.51%
Public Works
19,722
20,198
2.41%
PW Building
39,561
33,692
-14.84%
Equipment Services
74,933
78,446
4.69%
Administration
23,464
26,478
12.85%
Engineering
137,666
137,802
0.10%
Street & Alleys
837,402
853,812
1.96%
Snow & Ice Removal
205,260
205,615
0.17%
Parks
616,467
628,101
1.89%
Tree Service
211,722
210,454
-0.60%
Total Public Works
2,146,475
2,174,400
1.30%
Recreation
Playground
19,722
20,198
2.41%
Ice Rink
12,475
12,284
-1.53%
Park Service
12,811
12,518
-2.29%
Joint Recreation
145,000
147,000
1.38%
Skate Park
7,632
7,721
1.17%
Total Recreation
197,640
199,721
1.05%
Activity Center
Act Ctr - Community Use
264,394
274,008
3.64%
Act Ctr - Maintenance
62,024
59,463
-4.13%
Total Activity Center
326,418
333,471
2.16%
Planning &Zoning
121 687125182
2.87%
Tuition Reimbursement
10,200
10,200
0.00%
lContingency
50,000 1
50,000 1
0.00%
Total Expenditures
10,073,203 1
2.24%
Other Financing Uses
Transfer to Para transit Fund 0 0
Total Other Financing Uses 0 0
Grand Total Expenditures $10,073,203 $10,299,327 2.24%
Total Revenues $10,073,203 $10,299,327
Revenues Over (Und r) Expenditures $
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