CR 2012-105 Approve Proposed 2013 Budget and Levy-44M
September 4, 2012 City Of flop im Council Report 2012-105
APPROVE PROPOSED 2013 LEVY,
PROPOSED 2013 GENERAL FUND BUDGET
AND SET BUDGET MEETING DATE
Proposed Action
Staff recommends adoption of the following motions:
Move to approve Resolution 2012-066 "Approving proposed 2013 tax levy, debt service levies at levels under those
required in the bond covenants, proposed 2013 general fund budget, and setting budget meeting dates".
Adoption of resolution 2012-066 will set a maximum tax levy for 2013, 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 2013 general fund budget. Actual budget and tax levy adoption will not occur until December 2012.
Overview
Again for 2013 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`h. What changed in 2009 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 4, 2012 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. If there are no changes to the proposed budget if can be approved at that same meeting.
A proposed general fund budget has been established and is attached for your review. Adoption of the actual budget
will occur in December 2012 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 2013 and set the
preliminary levy. Levy limits were removed for 2012 and have not been reinstated.
• 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
• 2013 budget concerns
Supporting Information
• Power point presentation slides
• 2013 proposed general fund budget
• Resolution 2012-066
Christine M. Harkess. CPA, CGFM
Finance Director
Financial Impact: $ 10,631,875 Budgeted: Y/N X N Source: Taxes and other revenues
Related Documents (CIP, ERP, etc.): 2013 budget Notes:
Staff Analysis
• 2011/2012 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 Hopkins is most likely not going to be returned.
The market value exclusion program that replaced the previous MVHC that homestead properties qualified for remains
in place.
Levy limits last repealed for 2005 were reinstated for the years 2009-2011, were repealed for 2012 and have not been
reinstated..
• 2013 Levy
The City of Hopkins is proposing a total tax levy increase of $101,729 or 0.99%. The tax levy proposed totals
$10,352,720 which includes levies for the general fund, PERA increases and bonded debt. Details are included in the
attached summary of tax levy. Due to raising the gas and electric franchise fees we are able to offset the new 2012
street improvement levy and keep the debt service levy at the same amount as 2012 despite adding $166,737 of debt
service to the 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 shoxN n 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 into 2013.
• 2013 Budget Analysis
The 2013 general fund budget, and the 2013 general operating tax is proposed at $10,631,875 and $10,352,720
respectively. The proposed levy is set at a maximum amount and can only be reduced. The general fund budget is
currently proposed to increase by $75,350 or 0.71% over the 2012 budget and is balanced. Expenditures are at a very
modest increase for 2013 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.
In 2012 we had two changes that will impact the budget. The health inspection function of our inspections Department
was taken over by Hennepin County and resulted in a budget reduction for 2012 and years into the future. We also
migrated our dispatch service to Hennepin County in August 2012 which will save us approximately $300,000 per
year.
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
This will be the second year of the Market Value Homestead Exclusion (MVHE) so 1 don't expect many questions on
this aspect of the tax levy this year. The tax levy is projected to increase less than 1 % which should have minimal
impact on properties. We will know more when Hennepin County calculates the tax rates after the Sept 15°i
submission deadline.
• 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 — 2013. After
experiencing a significant increase in our contribution amount in 2011 it decreased in for 2012 but in 2013 it is once
again increasing. This is due to the development that we have had this last year.
Analysis of Fiscal Disparities
Year Contribution Distribution Gain/(Loss)
2013
3,111,160
2,271,762
2012
3,092,328
2,650,437
2011
3,324,078
2,645,025
2010
2,858,921
2,913,208
2009
2,766,202
2,840,070
2008
2,450,063
2,405,483
2007
2,116,466
1,997,455
2006
1,952,996
1,836, 753
2005
1,526,509
1,673,106
2012 Budget Meeting for the 2013 Budget and 2013 Tax Levy
(839,398)
(441,891)
(679,053)
54,287
73,868
(44,580)
(119,011)
(116,243)
146,597
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 15`h 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 15`h, 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 4, 2012 with possible adoption
of the final budget at that same meeting.
11,111,111111 N-0'06�
2013 Preliminary
Levy and Budget
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 4th
Budget Approval — can follow budget meeting
if no changes. Alternative date - Tuesday,
December 18th
1
Legislative changes effecting
local governments
■ Local Government Aid (LGA)
i i No longer receive LGA
■ Market Value Homestead Exclusion (MVHE)
❑ New program for 2012
❑ To emulate the former MVHC
■ No levy limits for 2013
❑ No levy limits in 2005-2008
❑ Levy limits for 2009-2011
❑ Levy limits removed in 2012
Q
City Planning
■ City council and staff have been meeting
and discussing options for maintaining a
balanced budget in 2013 and beyond.
■ Options include budget cuts, use of
reserves, taxes and new revenue sources.
■ The 2013 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 2012.
2
k:
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
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.
3
What are our tax needs?
■ The 2013 preliminary levy
i_i Levy set at $10,352,720
n Proposed increase of $101,729 or 0.99% over
the 2012 levy.
■ The increase is primarily a result of
decreases in revenue sources and
inflationary increases in expenditures.
■ Expenditures will increase 0.71 %
Tax Levy Options
■ The levy set this evening will be the
maximum levy for 2013.
■ 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.
Ell
2013 Proposed General Fund Budget
and 2013 Preliminary Levy
2013 General Fund
Budget
$10,631,875
This is a increase over
last years budget of
0.71%
The increase is due to
inflationary increases
2013 Levy
$10,352,720
This is an increase over
last years levy of
3101.729 or 0.99%.
Increase is due primarily
to loss of revenue
■
History of
Tax Increase
Levy
Year
Increase
2013
0.99%
2012
1.11%
2011
2.14%
2010
3.90%
2009
3.90%
2008
4.41%
2007
4.36%
5
Budget Challenges
■ Flat or decreasing property values
■ Decrease in several revenue sources
❑ police aid
❑ cyclical revenues
❑ lease revenues
■ Decreased interest income
Budget Impacts
■ Evaluated spending across all
departments
■ Delayed hiring of staff vacancies
■ Elimination of dispatch at local level
■ Health inspections — Hennepin Co.
■ Reduced capital expenditures
■ Focus on savings and efficiencies
Development and Taxes
■ City property taxes for 2013 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 currently in construction
and others in the planning stages will add to
the city's tax base for 2013 and beyond.
■
Fiscal Disparities
■ Changes
in the Fiscal Disparities Program affects the
tax rate for Hopkins properties.
Year
Contribution Distribution
Gain/(Loss)
2013
3,111,160 2,271,762
(839, 398)
2012
3,092.328 2,650,437
(441, 891)
2011
3,324.078 2.645.025
(679.053)
2010
2,858.921 2,9137208
54.287
2009
2,766,202 2,840,070
73,868
2008
2,450.063 2.4057483
(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
7
Financial Impacts
■ 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 $690,000 in interest expense
Questions?
CITY OF HOPKINS
PROPOSED GENERAL FUND REVENUE BUDGET
2012 2013 %
Department Budget Budget Incr/(Decr)
lProperty Taxes & PERA Special Levy 8,887,591-T 9,004,320 1.31%
Intergovernmental Revenue
PERA Aid
20,510
20,510
0.00%
Police - Federal Grant
0
82,000
17.39%
Police - State Aid
177,000
177,000
0.00%
Police - POST Reimbursement
9,000
9,000
0.00%
Police - Misc Grants
86,000
10,000
-88.37%
Police - 911 Service Fee
24,860
0
-100.00%
Fire - State Aid
70,000
70,000
0.00%
PW - State Aid
125,000
130,000
4.00%
Total Intergovernmental Revenue
512,370
498,510
-2.71%
Licenses, Permits & Fees
Court Fines
115,000
135,000
17.39%
Building Permit & Inspection Fees
246,500
269,180
9.20%
Business Licenses
5,000
5,000
0.00%
Administrative Citations
8,000
8,000
0.00%
Liquor , Animal Licenses & Penalties
98,700
97.000
-1.72%
Fire Licenses & Permits
3,500
3,500
0.00%
PW - Licenses & Permits
9,415
9,415
0.00%
P&Z - License & Permits
1,000
1,000
0.00%
Total Licenses, Permits & Fines
487,115
528,0951
8.41%
Charges for Service
Finance Department
5,750
5,750
0.00%
Municipal Building
2,500
0
-100.00%
Assessing
1,200
1,500
25.00%
City Clerk
0
5,000
10.00%
Inspections
71,950
71,850
-0.14%
Police
40,000
42,000
5.00%
Fire
70,000
3,000
-95.71%
Public Works
2,750
2,750
0.00%
Activity Center
49,500
49,500
0.00%
Planning & Zoning
1,500
1,500
0.00%
Total Charges for Service
245,150
182,850
-25.41%
Miscellaneous Revenue
Franchise Fees
290,000
290,000
0.00%
Finance Department
4,800
4,800
0.00%
Police
1,000
1,500
50.00%
Public Works
4,000
4,400
10.00%
Acitivty Center
13,500
13,500
0.00%
Communit Development
85,999
88,900
3.37%
Total Miscellaneous Revenue
399,299
403,100
0.95%
Interest Earnings
25,000
15,000
-40.00%
Total Revenues
$ 10,556,525
$ 10,631,875
0.71%
CITY OF HOPKINS
PROPOSED GENERAL FUND EXPENDITURE BUDGET
2012 2012 Budget %
Department Budget Budget Incr/(Decr)
FCity Council 68,697 68,967 1 0.39%
Administrative Services
Administration
171,090
179,060
4.66%
Personnel
44,405
46,768
5.32%
Wellness
2,000
2,000
0.00%
Information Services
251,637
254,988
1.33%
Total Administrative Services
469,132
482,816
2.92%
Finance
16,822
18,694
11.13%
Budget
26,249
26,388
0.53%
Debt Management
0
0
0.00%
General Accounting
133,402
137,199
2.85%
Payroll
45,075
45,609
1.18%
TIF Administration
0
0
0.00%
Utility Billing
5,000
5,000
0.00%
Total Finance
209,726
214,196 j
2.13%
Legal
135,000
142,000
5.19%
Munici al Building
296 863313
998
5.77%
Rece tionist
44,84647,048
4.91%
lAssessing
173,091 1
177,187
2.37%
City Clerk
City Clerk
16,822
18,694
11.13%
Records Management
32,273
33,088
2.53%
Elections
60,875
45,582
-25.12%
Total City Clerk
109,970
97,364
-11.46%
Inspections
Building Code Inspections
268,598
261,854
-2.51%
Fire Inspections
34,494
35,155
1.92%
Heating & Plumbing Inspections
91,358
88,952
-2.63%
Housing Inspections
135,597
157,595
16.22%
Restaurant & Hotel Inspections
1,160
0
-100.00%
Misc. Community Inspections
79,260
78,908
-0.44%
Vacant Property Management
2,700
4,666
72.81%
Total Inspections
613,167
627,130
2.28%
Police
Police Administration
486,499
527,437
8.41%
Patrol
2,466,299
2,653,370
7.59%
Heat Team
58,906
73,611
24.96%
Reserves
24,467
15,959
-34.77%
Investigations
430,357
615,083
42.92%
Metro Drug Task Force
105,292
114,468
8.71%
Pawn Shop
3,493
3,537
1.26%
Outreach
84,036
107,332
27.72%
Fire
Fire 851,559 920,261 8.07%
Emergency Preparedness 3,865 4,030 4.27%
Total Fire 855,424 924,291 8.05%
Public Works
2012
2012
Budget %
Department
Budget
Budget
Incr/(Decr)
Dispatch
553,145
0
-100.00%
Reception -Records
252,356
254,052
0.67%
Systems Management
65,182
65,855
1.03%
Total Police
4,530,032
4,430,704
-2.19%
Fire
Fire 851,559 920,261 8.07%
Emergency Preparedness 3,865 4,030 4.27%
Total Fire 855,424 924,291 8.05%
Public Works
PW Building
32,739
34,988
6.87%
Equipment Services
86.229
85,096
-1.31%
Administration
27,442
38,345
39.73%
Engineering
132,267
132,003
-0.20%
Street & Alleys
859,205
888,724
3.44%
Snow& Ice Removal
197,550
187,160
-5.26%
Parks
652,465
679,471
4.14%
Forestry
210,780
233,774
10.91%
Total Public Works
2,198,677
2,279,561
3.68%
Recreation
Playground
21,034
21,417
1.82%
Ice Rink
12.192
13,113
7.55%
Park Service
12,810
12,454
-2.78%
Joint Recreation
152,000
155,000
1.97%
Skate Park
7,063
7,165
1.44%
Total Recreation
205,099
209,149
1.97%
Activity Center
Act Ctr - Community Use
264,914
270,180
1.99%
Act Ctr - Maintenance
58,851
58,475
-0.64%
Total Activity Center
323,765
328,655
1.51%
IPlanning & Zoning
126,837
129,683
2.24%
lCommunity Development
85,999
88,926
3.40%
Tuition Reimbursement
10,200
10,200
0.00%
Contin enc
90,000
50,000
-44.44%
Total Expenditures
10,546,525 1
10,621,875
0.71%
Other Financing Uses
Transfers to other funds 10,000 10.000 0.00%
Total Other Financing Uses 10,000 10,000 0.00%
Grand Total Expenditures $10,556,525 $10,631,875 0.71%
Total Revenues $10,556,525 $10,631,875
Revenues Over (Under) Expenditures $
CITY OF HOPKINS
ANALYSIS OF TAX LEVY
Purpose
Subject to Levy Limits
General Fund
Capital Levy
Total Levy subject to Limits
Special Levies:
PERA Levy
MVHC Levy - for unallotment of 2008 & 2009
MVHC Levy - for unallotment of 2010
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
2007A Capital Improvement Bonds
2010A GO Improvement Bonds
2010B Refunding (2002B Improv Bds)
2012B GO Bonds
Gas & Elec Franchise Fees - levy offset
2012B Equipment Certificates
Fees used to offset levy
Subtotal - Debt Levies
Total - Special Levies
TOTAL LEVIES
Increase over prior year
08/02/2012
2010 2011 2012 2013 Est
$ 8,384,010 $ 8,539,064 $ 8,784,091 $ 8,885,820
100,000 125,000 125,000
$ 8,384,010 $ 8,639,064 $ 8,909,091 $ 9,010,820
35,500
35,500
35,500
35,500
239,175
-
-
-
-
222,850
-
-
274,675
258,350
35,500
35,500
108,000
-
-
-
59,000
59,000
-
-
200,000
200,000
220,000
220,000
185,000
172,000
184,500
186,520
715,000
710,000
765,900
763,800
-
100,000
77,000
77,000
-
-
59,000
-
166,737
(107,657)
64,370
(64,370)
1,267,000
1,241,000
1,306,400
1,306,400
$1,541,675
$ 1,499,350
$ 1,341,900
$ 1,341,900
$ 9,925,685
$ 10,138,414
$ 10,250,991
$10,352,720
$ 372,571 $ 212,729 $ 112,577 $ 101,729
Percentage Incr (Decr) - Total 3.90% 2.14% 1.11% 0.99%
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION NO. 2012-066
RESOLUTION APPROVING THE PROPOSED 2013 TAX LEVY, SETTING
DEBT SERVICES LEVIES AT LEVELS UNDER THOSE REQUIRED IN THE BOND
COVENANTS, APPROVINGTHE PROPOSED 2013 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 2013 upon the taxable property in the City of
Hopkins, for the following purposes.
General Levv
General Fund
$9,010,820
Special Levies
PERA Rate Increase
35,500
Debt Levies
2003 HRA Lease Revenue Bonds
220,000
2007A GO Capital Improvement Bonds
763,800
2007B GO Improvement Bonds
186,520
2010A GO Improvement Bonds
77,000
2012B GO Bonds
59,080
Subtotal Special Levies
1,341,900
Total Levy x]0,,720
HRA/EDA Leve
Housing & Redevelopment Authority Levy 225,000
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 2013 for the
following issues be levied at amounts less than that provided by the bond covenants.
Net Debt
Bond Issue Service Levv
$9,920.000 G.O. Capital lmprovement Bonds of 2007A $763,800
$5,505,000 G.O. Bonds of 2012B $ 59,080
That the Proposed 2013 General Fund Budget be set at $10,631,875.
That the budget meeting to discuss the 2013 budget and tax levy be set for December 4, 2012 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 4h day of September 2012.
Eugene Maxwell, Mayor
ATTEST:
Kristine A. Luedke, City Clerk