CR 2003-134-2004 General Fund Budget and Set Budget Public Hearing
( CITY Of: '\
September 2,2003
i I
HOPKINS
APPROVE PROPOSED 2003 LEVY, PAYABLE IN 2004,
PROPOSED 2004 GENERAL FUND BUDGET
AND SET BUDGET PUBLIC HEARING DATES
:_1
City Council Report 03-134
.
Proposed Action
Staff recommends adoption of the following motion: Move that Resolution 03-082 "Approving proposed
2003 tax levy, collectible in 2004, proposed 2004 general fund budget. and setting public hearing dates" be
adopted.
Adoption of this motion will set a preliminary maximum tax levy for 2003, collectible in 2004 and approve a
proposed 2004 general fund budget. Actual budget and tax levy adoption will not occur until December,
2003.
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 2003, and at that time, the final levy and budget may not exceed
the approved proposed levy. The city council is charged with the authority to establish a budget for 2004
and set the preliminary levy. The overall levy limitation law is in place for taxes payable in 2004, through
the Minnesota legislature.
The City tax levy proposed is at the levy limitation set by the State of Minnesota for taxes payable 2004.
.
. Staff is recommending that council approve the resolution approving the proposed levy at the levy
limit for general fund operations, approve the levy adequate for the payment of debt, eliminate the
Housing and Redevelopment Authority levy for one year to reduce the impact of increased taxes and
to establish the public hearing dates as set forth in the resolution.
Primary Issues to Consider
. Legislative impacts
. 2004 budget concerns
. Tax impacts of budget concerns
. Proposed new franchise fees
Supportin!! Information
. Staff analysis
. 2004 proposed general fund budget
. Historic Tax Levy Table
. Property tax impacts for Hopkins taxes payable 2004
.d:::;~
Lori K Yager
Finance Director
Staff Analvsis
. 2003 Legislative Actions
Levy limits are still in place for all counties and cities with populations over 2,500. The City of Hopkins has
normally stayed under levy limits in the past and has not regarded the limits as the levy amount These
limits are imposed to help control property tax increases. Increases are imposed for factors such as inflation,
household growth and loss of other revenues. This year the state passed legislation which impacted local
government aid for several cities and counties. The City of Hopkins was hit particularly hard, losing
$730,000 in 2003 and $1,100,000 in 2004. The new local government aid from the state is $50,000. The
legislature has also allowed cities the authority to levy back 60% of its lost aid in 2004. This is equal to
about $660,000.
. 2003 Levy
The City of Hopkins is proposing a total tax levy increase of $710,884 or 9.9%. The current general fund
operating levy increase of 10.7% or $660,000, a current debt service levy increase of 17% or $155,000, no
increase for the PERA adjustment and a current Housing and Redevelopment Authority levy decrease of
100% of($106,000). The City's levy's are proposed as follows: General fund $6,829,321, HRA $0, PERA
$11,815 and Debt $1,038,000 for a total levy of$7,879, 136. The overall tax capacity rate for the city will
increase to 58.8% from 56.9%, which translates into an increase over last year's city taxes of approximately
$123 for the average homeowner.
The increase in the operating levy for the general fund is to directly offset the lost aid of $1, I 00,000. The
increase in the debt service levy is to pay for the fire, police and public works facility improvements
approved in June 2002. The original proposed debt service levy was to be $443,000, but due to the loss of
aids the city will use reserves this year to make up the difference in needed funds. This helps in keeping
taxes down. Next year the debt levy will need to increase $250,000 to pay for the debt. The elimination of
the Housing and Redevelopment Authority levy for 2004 was a decision by the council to utilize reserves
instead of levy or taxes to pay for operations in this fund for 2004. This also helps in keeping taxes down.
Reinstatement of this levy will be considered in the future.
. 2004 Budget Analysis
The 2004 general fund budget, and the 2003/2004 general operating tax levy are proposed at $8,461,100 and
$6,829,321, respectively. The proposed general fund budget and levy are set at maximum amounts with a
possibility of future reductions. The levy increase for the general fund is a result of lost state aids in the
amount of $1,100,000. The general fund budget is proposed to decrease a total of $76,206 or 1 % under the
2003 budget. The 2004 operating budget includes a new transfer to debt service funds of $279,000 for the
lease revenue bonds issued to pay for the fire, police and public works facility improvements. Excluding
this transfer, operating expenditures in the general fund are proposed to be reduced by $355,000 or 4% to
help hold down increased fees and taxes. The decreases currently propose include a combination of early
retirements with no replacement, reduced capital spending and outsourcing of some current programs or
services. With decreased operating expenditures, residents will see changes in public services.
Labor agreements have not been settled for 2004. It is very likely that the health insurance premiums for
city employees will increase 15-20% in 2004. Salaries and benefits compose 76% of the current general
fund expenditures. 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 of2004 estimated general
fund budget revenues and estimated 2004 general fund expenditure appropriation requests. The summary
shows historical revenues and expenditures, which allows us to analyze current and future requests.
.
.
.
. Franchise Fees
During the process of looking at alternative funding sources, the city council is considering the possibility of
implementing franchise fees for both gas and electric utility companies. The proposed 2004 budget does
include the implementation of these fees. The fees may be used within the general fund to help fund routine
street repair and maintenance within the city. The impact of these fees could result in $1.50 per month fee
on electric and gas utility bills for residents.
. Tax Impacts of Levy's
Attached you'll find the proposed levy impacts for residential and commercial property's.
Historically the City Council has set the proposed levy amount at the State's recommended levy limit. This
year Finance is recommending that the Council again set the proposed levy amount at the levy limit set by
the state. The reason for setting the proposed levy at this level is that the anticipated needs of the city will
fall within this amount.
. 2003 Public Hearings for the 2004 Budget, 2003/2004 Tax Levy and the 2004 Tax Rate Increase
Cities with populations above 500 are required to hold public hearings to give notification of the proposed
property tax levy for the taxes payable year 2004 and the proposed budget for the taxes payable year 2004.
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 budgets and
property tax levy's for 2004. 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 if it would like to but it must not overlap the county or school districts date and must be in
between November 29, 2002 and December 20, 2002. There are other restrictions that must be adhered to
also.
Staff is recommending the City Council set it's initial hearing date on December 8, 2003 with the
continuation meeting (if needed) set for a regular meeting on December 16,2003, and final adoption to
follow on December 16,2003.
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. INCLUDES GENERAL FUND, DEBT SERVICE, HOUSING & REDEVELOPMENT and PERA
HISTORIC AND PROPOSED TAX LEVIES AND CITY TAX RATES
Total City
Levy Total Levy *** Tax Tax Gross
Payable Before **Tax HRA Debt PERA Levy Capacity Tax Levy
Years Credits Capacity Tax Levy Tax Levy Tax Levy After Credits Rate * Increase
2003/04 7,879,136 11,876,836 1,038,000 11,815 6,983,200 58.80% 9.92%
2002/03 7,168,252 11,140,721 106,000 883,000 11,815 6,334,823 56.86% 8.76%
2001/02 6,591,140 10,658,607 100,000 342,000 11,815 5,850,411 54.89% 9.78%
2000/01 6,003,993 13,451,366 342,000 4,314,233 32.07% 6.00%
1999/00 5,664,144 12,526,355 330,000 4,022,438 32.11 % 5.23%
1998/99 5,382,640 11,749,302 330,000 3,811,583 32.44% 3.63%
.97/98 5,194,184 11,936,742 330,000 3,635,016 30.45% 0.30%
1996/97 5,178,800 13,194,123 739,663 3,647,887 27.65% 1.21 %
1995/96 5,117,000 12,902,081 578,574 3,682,276 28.54% 3.30%
1994/95 4,953,600 12,981,406 573,947 3,510,380 27.04%
In 2002 the legislature removed HACA 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.
* Tax Capacity Rate Computation
** Tax capacity reduced by Fiscal Disparities contribution and Tax Increment Financing Districts.
***Levy reduced by Fiscal Disparities distribution and HACA (Homestead and Ag Credit) through 2001.
Page 4
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CITY OF HOPKINS
.
Hennepin County, Minnesota
RESOLUTION NO. 03-078
RESOLUTION APPROVING THE PROPOSED 2003 TAX LEVY COLLECTIBLE IN 2004, APPROVING
THE PROPOSED 2004 BUDGET, AND SETTING PUBLIC HEARING DATES
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF HOPKINS, MINNESOTA, that the following sums
of money be levied for the current year collectible in 2004 upon the taxable property in said City of
Hopkins, for the following purposes.
General Fund $6,829,321
Housing and Redevelopment Authority 0
PERA rate increase 11,815
General Obligation Bonds 210,000
Improvement Bonds 150,000
Housing and Redevelopment Lease Revenue Bonds 678,000
. Total Levy $ 7,879,136
This levy is made based on current law and the 2004 General Fund Budget of $8,461,100.
Provision has been made for the payment of the City's contributory share to the Public Employees Retirement
Association.
.
Provision has also been made for the payment of principal and interest on the following bond issues:
Redevelopment Bonds 1-1-97, Redevelopment Bonds 10-1-96,
Sewer Revenue Bonds 12-1-89, Refunded 10-15-93 & Refunded 12-4-01,
Refunding Bonds (Taxable) 2-1-92, Redevelopment Bonds 12-1-89 & Refunded 10-15-93,
Improvement Revolving Bonds 8-1-92 & Refunded 12-4-01 *,
Park Bonds 3-1-90 & Refunded 10-15-93 & Refunded 12-4-01 *, Housing Bonds 9-1-95,
Housing Bonds 6-1-97, G.O. Storm Sewer Revenue Bonds 8-1-99,
Taxable G.O. Housing Improvement Bonds 8-1-99, G.O. Water Revenue Bonds 4-1-00,
G.O. Improvement Revolving Bonds 8-1-99*, G.O. Improvement Revolving Bonds 10-1-02*,
Redevelopment Bonds 10-1-02, HRA Lease Revenue Bonds 10-1-02*, HRA Lease Revenue Bonds 6-1-03*,
Taxable G.O. Housing Improv. Bonds 5-1-99, G.O. Storm Sewer Revenue Bonds 6-1-03, Levy *
Public hearing date for the 2004 budget is December 8, 2003, with a continuation hearing date of December 16,
2003, if necessary.
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 2nd day of September, 2003.
By
.
Eugene Maxwell, Mayor
ATTEST:
Terry Obermaier, City Clerk