CR 11-082 Approve Proposed 2012 Lecy, Proposed 2012 General Fund Budget and Set Budget Meeting Date• September 6, 2011
14ca
City of Hopkins
Council Report 2011-082
APPROVE PROPOSED 2012 LEVY,
PROPOSED 2012 GENERAL FUND BUDGET
AND SET BUDGET MEETING DATE
Proposed Action
Staff recommends adoption of the following motions:
Move to approve Resolution 2011-045 "Approving proposed 2012 tax levy, debt service levies at levels under those
required in the bond covenants proposed 2012 general fund budget and setting budget meeting dates".
Adoption of resolution 2011-045 will set a maximum tax levy for 2012, 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 2012 general fund budget. Actual budget and tax levy adoption will not occur until December 2012.
Overview
Again for 2012 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 changed in 2010 and has not been reinstated 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 6, 2011 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 20''.
• A proposed general fund budget has been established and is attached for your review. Adoption of the actual budget
will occur in December 2011 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 2012 and set the
preliminary levy. Levy limits were removed for 2012.
• 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
• 2012 budget concerns
Supporting Information
• Power point presentation slides
• 2012 proposed general fund budget
• Resolution 2011-045
Christine M. Harkess. CPA, CGFM
Finance Director
Financial Impact: $ 10,519,463 Budgeted: Y/N X N Source: Taxes and other revenues
Related Documents (CIP, ERP, etc.): _2012 budget_ Notes:
• Staff Analysis
• 2010/2011 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, 2010 was reinstated for 2011 and then
one again unallotted. This impacts the City of Hopkins as we were receiving $50,000 in LGA for the Hopkins Center
for the Arts. LGA for 2012 has been unallotted.
Market Value Homestead Credit (MVHC), a state -paid property relief program for owners of certain qualifying
homestead property has been eliminated. In its place will be a market value exclusion for the amount of the previous
MVHC the homestead property qualified for.
In the past the state has unallotted the city's reimbursement for 2009, 2010 and 2011. This resulted in a loss of tax
revenue totaling $723,037 for the years 2009-2011; $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 and 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 and were repealed for 2012.
• 2012 Levy
The City of Hopkins is proposing a total tax levy increase of $209,914 or 2.07%. The tax levy proposed totals
$10,348,328 which includes levies for the general fund, PERA increases and bonded debt. Details are included in the
attached summary of tax levy.
• The Housing and Redevelopment Authority levy for 2012 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 and
continues for 2012.
• 2012 Budget Analysis
The 2012 general fund budget, and the 2012 general operating tax is proposed at $10,519,463 and $9,041,928,
respectively. The proposed levy is set at maximum amount and can only be reduced. The general fund budget is
currently proposed to increase by $220,136 or 2.14% over the 2011 budget is balanced. Expenditures are at a very
modest increase for 2012 and include a modest wage increase for 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 2012 general fund budget revenues and expenditures.
• Tax Impacts of Levy's
Due to changes in the market value homestead credit program, the state and county are working to calculate the new
market value exclusion. The MV exclusion will give homesteaded property an exemption of value equal to
approximately what they would have received under the previous MVHC program. While this will make the city
•whole with regards to the levy it will cause taxes to increase on some property as the credit formerly paid by they state
is now absorbed by taxpayers in the city. We do not yet have the information to calculate how this affects specific
property but non -homestead property will certainly see an increase, we just don't yet know how much.
•• Fiscal Disparity
The fiscal disparities program also affects what the tax impact will be on Hopkins taxpayers. If the city is a net
contributor taxpayers see an increase in the tax rate, however if the city is a net distributor the tax rate will go down.
Shown below are the fiscal disparities contribution and distribution amounts for the years 2005 — 2012. After
experiencing a significant increase in our contribution amount in 2011 we will see a decrease in the contribution for
2012 which will hopefully bring the tax rate down.
• 2011 Budget Meeting for the 2012 Budget and 2012 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 6, 2011 and adoption of the final
budget to be at the December 20, 2011 council meeting.
•
Net
Year
Contribution
Distribution
Gain/(Loss)
2012
3,092,328
2,650,437
(441,891)
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 Budget Meeting for the 2012 Budget and 2012 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 6, 2011 and adoption of the final
budget to be at the December 20, 2011 council meeting.
•
•
•
■
Legislative changes effecting
local governments
■ Local Government Aid (LGA)
$50,000 earmarked for the Arts Center
Unallotted since 2009
■ Market Value Homestead Credit (MVHC)
Unallotted for 2009, 2010 & 2011
Program eliminated for 2012
■ No levy limits for 2012.
No levy limits in 2005-2008
Levy limits for 2009-2011
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 changed in 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 6th
i Budget Approval —Tuesday, December 201h
■
City Planning
■ City council and staff have been meeting and
discussing options for maintaining a balanced
budget in 2012 and beyond.
■ Options include budget cuts, use of
reserves, taxes and new revenue sources.
■ The 2012 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 2011.
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.
The City may cancel or delay capital projects
■ Increased revenues are derived primarily from
new fees and increased charges for services.
■ The City may receive grants for specific
programs.
1
•
•
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What are our tax needs?
■ The 2012 preliminary levy
Levy set at $10,348,328
Proposed increase of $209,914 or 2.07% over the
2011 levy.
■ The increase is primarily a result of decreases
in revenue sources and inflationary increases in
expenditures.
■ Expenditures will increase 2.14%
2012 Proposed General Fund Budget
and 2012 Preliminary Levy
2012 General Fund
Budget
$10,519,463
This is a increase over
last years budget of
2.14%
2012 Levy
$10,348,328
This is an increase over
last years levy of
$209,914 or 2.07%.
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 2012.
■ 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
■ Change in market value homestead
credit program
■ Flat or decreasing property values
■ Decrease in several revenue sources
police and fire aid
court fines
■ Decreased interest income
Development and Taxes
■ City property taxes for 2012 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.
Recently decertified TIF District 2-1
Added over $500,000 to the tax base in 2011
■ Additional projects in the planning stages will add to
the city's tax base for 2013 and beyond.
L
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2012 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 bond refundings have saved us
over $535,000 in interest expense
3
Fiscal Disparities
■ Changes in the Fiscal Disparities Program
affects the
tax rate for Hopkins properties.
Net
Year Contribution Distribution
Gain/(Loss)
2012 3,092,328 2,650,437
(441,891)
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
2012 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 bond refundings have saved us
over $535,000 in interest expense
3
CITY OF HOPKINS
PROPOSED GENERAL FUND REVENUE BUDGET
• 2011 2012 % %
Department Budget Budget Incr/(Decr) of total
1Property Taxes & PERA Special Levy 8,863,4141 8,984,928 1.37% 85.41%
Intergovernmental Revenue
PERA Aid
20,510
20,510
0.00%
MVHC unallotment
(232,850)
0
-100.00%
Police - Federal Grant
0
0
-33.33%
Police - State Aid
177,700
177,000
-0.39%
Police - POST Reimbursement
10,000
9,000
-10.00%
Police - Misc Grants
4,000
10,000
150.00%
Police - 911 Service Fee
24,860
24,860
0.00%
Fire - State Aid
85,000
70,000
-17.65%
Fire - County
0
0
-5.52% 4.89%
PW - State Aid
120,000
125,000
4.17%
Total intergovernmental Revenue
209,220
436,370 1
108.57% 4.15%
Licenses, Permits & Fees
Court Fines
135,000
115,000
-14.81%
Building Permit & Inspection Fees
283,100
274,100
-3.18%
Business Licenses
7,500
5,000
-33.33%
Administrative Citations
6,000
8,000
33.33%
Liquor, Animal Licenses & Penalties
95,900
98,700
2.92%
Fire Licenses & Permits
5,300
3,500
-33.96%
PW - Licenses & Permits
9,490
9,415
-0.79%
• P&Z - License & Permits
2,500
1,000
-60.00%
Total Licenses Permits & Fines
544,790 1
514,715
-5.52% 4.89%
Charges for Service
Finance Department
5,200
5,750
10.58%
Municipal Building
2,500
2,500
0.00%
Assessing
1,000
1,200
20.00%
City Clerk
11,100
0
-100.00%
Inspections
43,450
71,950
65.59%
Police
43,500
40,000
-8.05%
Fire
6,200
70,000
1029.03%
Public Works
2,250
2,750
22.22%
Activity Center
46,000
49,500
7.61%
Planning & Zoning
0
1,500
-20.59%
Total Charges for Service
161,200
245,150
52.08% 2.33%
Miscellaneous Revenue
Franchise Fees
290,000
290,000
0.00%
Unallocated Misc
500
0
-100.00%
Finance Department
4,800
4,800
0.00%
Elections
0
0
Police
500
1,000
100.00%
Fire
0
0
Public Works
2,100
4,000
90.48%
Acitivty Center
17,000
13,500
-20.59%
Total Miscellaneous Revenue
314,900
313,300
-0.51%
2.98%
• Interest Earnings
75,000
25,000
-66.67%
0.24%
Use of 2009 Budget Savin - s
130,803
-
0.00%
Total Revenues
$10,299,327
$10,519,463
2.14%
100.00%
•
•
CITY OF HOPKINS
PROPOSED GENERAL FUND EXPENDITURE BUDGET
Department
Citv Council
Administrative Services
2011 2012 Budget %
Budget Budget Incrl(Decr)
71,547 68,697 -3.98%
Administration
167,300
171,090
2.27%
Personnel
43,924
44,405
1.10%
Wellness
2,000
2,000
0.00%
Information Services
238,446
251,637
5.53%
Total Administrative Services
451,670
469,132
3.87%
Finance
135,0001
135,0001
0.00%
Budget
23,066
26,249
13.80%
Debt Management
0
0
1.53%
General Accounting
129,448
134,813
4.14%
Payroll
46,729
45,075
-3.54%
TIF Administration
0
0
-1.44%
Utility Billing
4,000
5,000
25.00%
Total Finance
203,243
211,137
3.88%
Legal
135,0001
135,0001
0.00%
Munici al Building
294,818
296,863
0.69%
Rece tionist
4,172
44,172.r-
44,846
1.53%
lAssessing
167,236
173,091
3.50%
City Clerk
City Clerk
19,360
19,738
1.95%
Records Management
29,833
35,673
19.58%
Elections
50,222
62,275
24.00%
Total Citv Clerk _
99,415
117,686
18.38%
Inspections
Building Code Inspections
252,170
268,598
6.51%
Fire Inspections
38,205
34,494
-9.71%
Heating & Plumbing Inspections
90,400
91,358
1.06%
Housing Inspections
134,680
135,597
0.68%
Restaurant & Hotel Inspections
23,309
22,974
-1.44%
Misc. Community Inspections
75,143
78,245
4.13%
Vacant Property Management
2,700
2,700
0.00%
Total Inspections
616,607
633,9§§j
2.82%
Police
Police Administration
480,615
501,409
4.33%
Patrol
2,360,705
2,490,044
5.48%
Heat Team
73,298
69,951
-4.57%
Reserves
33,620
34,677
3.14%
Investigations
499,148
388,267
-22.21%
Metro Drug Task Force
105,737
105,292
-0.42%
Pawn Shop
3,436
3,493
1.66%
Outreach
80,804
84,036
4.00%
Fire
Fire 833,587 852,970 2.33%
Emergency Preparedness 4,671 3,865 -17.26%
Total Fire 838,258 856,835 2.22%
Public Works
2011
2012
Budget %
Department
Budget
Budget
Incr/(Decr)
Dispatch
526,782
553,145
5.00%
• Reception -Records
255,560
252,709
-1.12%
Systems Management
64,682
65,182
0.77%
Total Police
4,484,387
4,548,205
1.42%
Fire
Fire 833,587 852,970 2.33%
Emergency Preparedness 4,671 3,865 -17.26%
Total Fire 838,258 856,835 2.22%
Public Works
PW Building
33,692
32,739
-2.83%
Equipment Services
78,446
86,229
9.92%
Administration
26,478
27,442
3.64%
Engineering
137,802
132,267
-4.02%
Street & Alleys
853,812
858,632
0.56%
Snow & Ice Removal
205,615
197,550
-3.92%
Parks
628,101
652,465
3.88%
Tree Service
210,454
210,780
0.15%
Total Public Works
2,174,400
2,198,104
1.09%
Recreation
Playground
20,198
21,034
4.14%
Ice Rink
12,284
12,192
-0.75%
Park Service
12,518
12,810
2.33%
Joint Recreation
147,000
152,000
3.40%
• Skate Park
7,721
7,063
-8.52%
Total Recreation
199,721
205,099
2.69%
Activity Center
Act Ctr - Community Use
274,008
264,914
-3.32%
Act Ctr - Maintenance
59,463
58,851
-1.03%
Total Activity Center
333,471
323,765
-2.91%
Planning &Zoning
125,182
126,837
1.32%
Tuition Reimbursement
10,200
10,200
0.00%
lContingency
50,000 1
100,000
100.00%
Total Expenditures
10,299,327 1
10,519,4631
2.14%
Other Financing Uses
Transfers to other funds 0 0
Total Other Financing Uses 0 1 0
Grand Total Expenditures $10,299,327 $10,519,463 2.14%
Total Revenues $10,299,327 $10,519,463
• Revenues Over (Under) Expenditures $
•
•
CITY OF HOPKINS
2012 PROPOSED TAX LEVY
Purpose 2010 2011
General Operations
General Fund $ 8,384,010 $ 8,539,064
Capital Levy - 100,000
$ 8,384,010 $ 8,639,064
Special Levies:
PERA Levy
MVHC Levy
Subtotal Special Levies - Other
Debt Levies:
2001 GO Refunding Bonds - Park & Rec
2002B GO Improv Revolving Bonds
2003 HRA Revenue Bonds
2007B GO Improv Revolving Bonds
2007 Capital Improvement Bonds
2010A GO Improvement Bonds
2010B Refunding Bonds
Subtotal - Debt Levies
Subtotal Special Levies
TOTAL LEVIES
Increase over prior year
Percentage Incr (Decr) - Total
35,500 35,500
239,175 222,850
$ 274,675 $ 258,350
108,000
-
59,000
59,000
200,000
200,000
185,000
172,000
715,000
710,000
-
100,000
$ 1,267,000
$ 1,241,000
$ 1,541,675 $ 1,499,350
$ 9,925,685 $ 10,138,414
2012
Net Levy
Proposed
$ 8,881,428
$ 125,000
$ 9,006,428
35,500
$ 35,500
220,000
184,500
765,900
77,000
59,000
$ 1,306,400
$ 1,341,900
$10,348,328
$ 372,571 $ 212,729 $ 209,914
3.90% 2.14% 2.07%
CITY OF HOPKINS
Hennepin County, Minnesota
• RESOLUTION NO. 2011-045
RESOLUTION APPROVING THE PROPOSED 2012 TAX LEVY, SETTING
DEBT SERVICES LEVIES AT LEVELS UNDER THOSE REQUIRED IN THE BOND
COVENANTS, APPROVINGTHE PROPOSED 2012 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 2012 upon the taxable property in the City of
Hopkins, for the following purposes.
General Levy
General Fund
$9,006,428
Special Levies
PERA Rate Increase
35,500
Debt Levies
2003 HRA Lease Revenue Bonds
220,000
2007A GO Capital Improvement Bonds
765,900
2007B GO Improvement Bonds
184,500
2010A GO Improvement Bonds
77,000
2010B GO Refunding Bonds
59,000
Subtotal Special Levies
is
1,341,900
Total Levy
10.348.328
HRA/EDA Levy
Housing & Redevelopment Authority Levy
175.000
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 2012 for the
following issues be levied at amounts less than that provided by the bond covenants.
Net Debt
Bond Issue Service Lew
$9,920.000 G.O. Capital Improvement Bonds of 2007A $765,900
$ 220,000 G.O. Refunding Bonds of 2010B $ 59,000
That the Proposed 2012 General Fund Budget be set at $10,519,463.
0
That the budget meeting to discuss the 2012 budget and tax levy be set for December 6, 2011 and that
the date the final budget and levy will be adopted be set as December 20, 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 6"' day of September 2011.
ATTEST:
Terry Obermaier, City Clerk
•
0
LM
Eugene Maxwell, Mayor