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VII.3. Resolution Approving Proposed 2024 General Fund Budget and Set Budget Meeting Date; Bishop CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: September 19, 2023 Subject: Approve Proposed 2024 Levy, Proposed 2024 General Fund Budget and Set Budget Meeting Date _____________________________________________________________________ RECOMMENDED ACTION MOTION TO Approve Resolution 2023-030 approving proposed 2024 Tax Levy, Setting Debt Service Levels at Levels Under Those Required in the Bond Documents, Approving the Proposed 2024 Budget and Setting the Budget Meeting Date OVERVIEW The City is required to certify a proposed tax levy and submit to Hennepin County by September 30th. This will be the maximum levy for 2024 and can only be reduced. The certified levy amount is also used for truth in taxation notices. The City must hold a public hearing on the budget between November 25th and December 28th. The proposed date of Monday, December 4th would allow time to consider comments heard at the public hearing before passing the a final tax levy and budget. The date does not conflict with public hearings of Hopkins School District or Hennepin County. SUPPORTING INFORMATION • Overview of Preliminary Tax Levy and General Fund Budget • 2024 Preliminary General Fund Budget • 2024 Tax Levy Summary • Resolution 2023-030 Finance Department Overview of Preliminary Tax Levy and General Fund Budget 2024 General Fund Budget Staff has worked to put together a 2024 General Fund Budget that meets the needs of the community and maintains service levels. The 2024 General Fund Budget being presented includes the following additions: • Increased I.T. costs for Police needs - $165,000 o Estimated annual subscription/service fees for a new Record Management System o Enhanced security measures mandated by the Bureau of Criminal Apprehension • Diversity, Equity & Inclusion (DEI) - $100,000 o Allocation to meet Financial Investment and Human Capital goals to be developed through the Equity Strategic Action Plan (ESAP) o Information on the City’s ongoing DEI work and ESAP is here: https://www.hopkinsmn.com/581/Race-Equity • Maintenance Worker for Forestry/Parks Division - $60,000 o The start date would be delayed until 5/1/2024 • Transfer to Depot/ACE Program - $40,000 increase, 60,000 total o The preliminary budget for the Depot Fund includes a $60,000 contribution from the City of Minnetonka, $50,000 from Hopkins Schools and $19,500 from Three Rivers Park District. The draft budget presented on July 18th included amounts for sustainability initiatives and an Assistant Fire Chief position. Both items are still funded in 2024 and will be paid out of separate funds. On September 5th, City Council approved the first readings for two ordinances increasing gas and electric franchise fees. The ordinances would increase fees collected by the City. The 2024 General Fund Revenue budget adds $50,000 of previously unallocated franchise fees to help offset the tax levy. The General Fund budget will decrease its fund balance by $400,000. Revenues are set at $18,021,803, a $833,363 or 4.85% increase from 2023. Expenditures are set at $18,421,803, a $1,233,363 or 7.18% increase from 2023. The tax levy to support this budget is $14,426,326 a $490,545 or 3.52% increase from 2023. Capital Levy There will be no capital levy in 2024. The capital improvement fund will use a $427,650 transfer related to a 2021 General Fund surplus to fund projects in 2024. Projects include Activity Center Flooring, Building Automation Systems at City Hall, Police and Fire stations, HVAC at Fire Station and roof replacement in the parking ramp. Arts Center Levy The Arts Center Levy will be set at $345,000, a reduction of $31,467. The Arts Center has made significant progress on eliminating the deficit owed to the General Fund through cost savings and ARPA funding. It would continue to work towards that goal in 2024, but at a reduced rate. Pavilion Levy The Pavilion Levy will be set at $440,000 in 2024. The majority of the levy ($340,000) will provide for debt service payments related to the 2018 remodel project. The remaining amounts will be used for the replacements of a water heater, entrance doors and flooring. Equipment Replacement Levy The equipment levy will be set at $360,000 and rely on reserves to fund purchases in 2024. The projected fund balance at the end of 2024 is $743,627, a $369,641 decrease. Permanent Improvement Levy There will be no permanent improvement levy in 2024. This levy has been used to fund street lighting upgrades and was proposed as a source to repair or replace fencing along Excelsior Blvd. These projects will be deferred. Burnes Park Debt Service Levy The 2017 project was funded through the issuance of general obligation bonds over a 15-year period with the final payment occurring in 2033. Debt service payments have been paid with both tax levy and park franchise fees. The preliminary levy uses $53,859 of park franchise fees for this purpose and reduces the debt levy by the same amount. 2024 Tax Levy The 2024 Tax Levy has been prepared based on debt service needs, preliminary ERP/CIP documents and initial budgets for special revenue funds. The total tax levy is $19,678,939, this is a $912,715 or 4.86% increase from 2023. Based on preliminary tax capacity information, city taxes on a median value home ($369,300) would be $2,187, which is a $1 or 0.1% decrease from 2023. City of Hopkins General Fund Revenue Budget For the Year Ending December 31, 2024 Preliminary September 19, 2023 Department 2023 Budget 2024 Budget % Increase (Decrease) Property Taxes 14,020,781 14,511,326 3.50% Intergovernmental Revenue Local Government Aid 925,794 1,081,012 Intergovernmental Revenue - Other 705,000 797,000 Total Intergovernmental Revenue 1,630,794 1,878,012 15.16% Licenses, Permits & Fines Court Fines & Penalties 176,000 176,000 Building Permits & Inspections 557,000 563,000 Inspection Fines & Citations 3,000 3,000 City Clerk - Business Licenses 8,000 8,900 PD - Liquor, Animal Licenses & Penalties 101,800 101,800 Fire - Licenses & Permits 4,000 4,000 Public Works - Licenses & Permits 19,415 19,615 Planning & Zoning - Licenses & Permits 1,000 2,000 Total Licenses, Permits & Fines 870,215 878,315 0.93% Charges for Service Finance Department 5,500 5,500 Assessing 3,000 3,000 Inspections 175,450 175,450 Police 35,000 35,000 Fire 10,500 10,500 Public Works 3,150 3,150 Activity Center 94,300 118,500 Total Charges for Service 326,900 351,100 7.40% Miscellaneous Revenue Franchise Fees 296,200 346,200 Miscellaneous 20,250 25,250 Finance Department 3,000 3,000 Police 500 500 Fire 3,500 3,500 Public Works 5,300 10,600 Activity Center 11,000 14,000 Total Miscellaneous 339,750 403,050 18.63% Total Revenues 17,188,440 18,021,803 4.85% City of Hopkins General Fund Expenditure Budget For the Year Ending December 31, 2024 Preliminary September 19, 2023 Department 2023 Budget 2024 Budget % Increase (Decrease) City Council 105,851 133,032 25.68% Administrative Services 502,931 564,399 12.22% Information Technology 483,570 650,365 34.49% Diversity, Equity & Inclusion 33,530 133,530 298.24% Finance 744,883 724,979 -2.67% Legal 225,000 250,000 11.11% Municipal Building 380,832 416,207 9.29% City Clerk 245,466 322,770 31.49% Inspections 1,062,119 1,173,086 10.45% Police 6,958,766 7,129,993 2.46% Fire 1,633,390 1,709,791 4.68% Public Works 3,632,027 3,899,510 7.36% Recreation 306,993 276,441 -9.95% Activity Center 486,192 554,995 14.15% Planning & Zoning 170,842 224,193 31.23% Community Development 126,848 129,312 1.94% Tuition Reimbursement 19,200 19,200 0.00% Contingency 50,000 50,000 0.00% Transfer to Depot/ACE Program 20,000 60,000 200.00% Total Expenditures 17,188,440 18,421,803 7.18% City of Hopkins Tax Levy For the Year Ending December 31, 2024 Preliminary September 19, 2023 Actual Proposed % Increase Purpose FY2023 FY2024 (Decrease) General Operations General Fund 13,935,781 14,426,326 3.52% Capital Levy - - 0.00% Arts Center 347,697 345,000 -0.78% Pavilion Fund 340,000 440,000 29.41% Equipment Replacement 250,000 360,000 100.00% Permanent Improvement - - 0.00% Total General Operations 14,873,478 15,571,326 4.69% Debt Levy 3,892,746 4,107,613 5.52% Total Levy 18,766,224 19,678,939 4.86% CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA RESOLUTION 2023-030 APPROVING THE PROPOSED 2024 TAX LEVY, SETTING DEBT SERVICE LEVELS AT LEVELS UNDER THOSE REQUIRED IN THE BOND DOCUMENTS, APPROVING THE PROPOSED 2024 BUDGET, AND SETTING THE BUDGET MEETING DATE NOW THEREFORE BE IT RESOLVED, that the City Council of the City of Hopkins hereby approves the following sums be levied for 2024 upon the taxable property in the City of Hopkins, for the following purposes: General Levy General $15,571,326 Special Levies Debt Levies 2014A GO Bonds 97,000 2015A GO Street Reconstruction Bonds 250,000 2015B GO Tax Abatement Bonds 125,000 2016A GO Improvement Bonds 100,000 2016B GO Tax Abatement Bonds 36,781 2016C GO Bonds 200,000 2017A GO Street Reconstruction Bonds 915,000 2017B GO Tax Abatement Bonds 102,061 2018A GO Equipment Certificates 79,487 2018A GO Improvement Bonds 450,000 2019A GO Bonds 375,000 2019B GO Refunding Bonds 115,300 2020A GO Bonds 193,125 2020B GO Refunding Bonds 308,114 2021A GO Bonds 208,662 2022A GO Bonds 325,072 2023A GP Temporary Bonds 228,011 Subtotal Special Levies $4,107,613 Total Levy $19,678,939 That based upon staff analysis of special assessments currently levied for Permanent Improvement Bonds, alternative revenue sources for the Capital Improvement Bonds and Equipment Certificates, and available reserves within all debt service funds listed below, that the debt service levies for 2024 for the following issues be levied at amounts less than provided by the bond covenants. Bond Issue $1,895,000 GO Bonds of 2014A $ 97,000 $4,100,000 GO Street Reconstruction Bonds of 2015A $250,000 $4,335,000 GO Improvement Bonds of 2016A $100,000 $1,875,000 GO Bonds of 2016C $200,000 $11,795,000 Street Reconstruction Bonds of 2017A $915,000 $3,170,000 GO Tax Abatement Bonds of 2017B $102,061 $6,715,000 GO Improvement Bonds of 2018A $ 79,487 $3,285,000 GO Tax Abatement Bonds of 2018B $ 0 $12,185,000 GO Bonds of 2019A $375,000 $2,015,000 GO Refunding Bonds of 2019B $115,000 That the Proposed 2024 General Fund Budget be set at $18,421,803 That the budget meeting to discuss the 2024 budget and tax levy be set for December 4, 2023 at 6:30 PM in the City Council Chambers. BE IT FURTHER RESOLVED that the City Clerk is hereby ordered and directed t0 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 19th day of September, 2023. By:___________________________ Patrick Hanlon, Mayor ATTEST: _______________________________ Amy Domeier, City Clerk