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Home My WebLink About2003-10-22 AGENDAAGENDA COTTAGE GROVE CITY COUNCIL Wednesday, October 22, 2003 Special Workshop Session - 7.�00 p.m. 1. CALL TO ORDER — Mayor 2. ROLL CALL — City Clerk a. Discussion of the 2004 Operating Budget and the 2004 Preliminary Property Tax Levy. 3. ADJOURNMENT Posted on Bulletin Board: October 17, 2003 � � . REQUES7 OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # 1z � A DA7E 10-15-03 �� PREPARED BY F inance & Administrative Service Ron Hedberg ORIGINATING DEPARTMENT STAFF AUTHOR • f f� f f� f� f�� 1��! f�� f f t t 1�� f t f � f i�� ! f f i� f t• COUNCIL ACTION REQUEST Conduct Council work session on the 2004 Operating Budget and the 2004 Preliminary Property Tax Levy STAFF RECOMMENDATION Conduct worksession BUDGET IMPLICATION SUPPORTING DOCUMENTS: BUDGETED AMOUNT ACTUAL AMOUNT � MEMO/LETTER: ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS S c�� t o _,0_03 City Administrator Date •��:��sr�ew+��i��« �ei:►��e��t��*w��e:• COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED [�OTHER �J.;%�� ..�;� �u��-�J ,�,.t �,-J in-a,a-�3 � ��, 1:120D4 BudpetlMemoa\CC ACtion Fortn - 2004 budpel upda@.00c City of Cottage Grove Memo ' � Finance and Administrative Services TO: FROM DATE: RE: Honorable Mayor and City Council Ryan Schroeder, City Administrator Ron Hedberg, Finance Director October 10, 2003 Conduct Worksession on the 2004 Preliminary Operating Budget and Property Tax Levy for Taxes Payable in 2004 introduction At the September 3 Council meeting the 2004 Preliminary Operating Budget was adopted along with the 2004 property tax levy for 2004. As the budget currently stands the Generai Fund expenditures exceed the revenues by $81,195. At the last workshop, the direction provided was that at the second Council meeting in October the General Fund budget would be revisited to address this budget shortfall. When we discuss the budget changes, Council should keep in mind the current "tax and budgeY' climate we operate in. The past summer was spent reacting to significant changes in the funding relationship between the State and locai governments. For each budget year the City will want to continue to exercise restraint when considering operating expenses. In addition to the overall budget constraints the City is currently operating under, the year 2004 saw an increase in the debt service levy for the 2004 pavement management project. This annual debt service for pavement management projects will exceed $1,000,000 this year and it is expected that it will remain near this level into the future. The next pavement management project is scheduled for 2007, which coincides with a drop in the existing debt service to be able to provide the debt service capacity for the 2007 project. When the pavement management program was started in 1994 the City made a large commitment was made for infrastructure replacement and it can be expected that this commitment will be maintained into the future. Discussion: Since adopting the preliminary levy in September we have received the total tax capacity numbers for the county. The total city-wide tax capacity increased 7.1%, or $1,277,104 to a total of $19,254,862. Based on the preliminary levy the tax extension rate wiil increase 4.1% to 43.712%. Staff will present additional infoRnation on the impacts to property owners this tax extension rate may have. The State is currently in the process of "phasing ouY' the limited market value for residential property, where the limited taxable market value may increase 12% this year compared to last years maximum tax value increase of 10%. The majority of Cottage Grove residentiai property has historically been constrained by the limited market Honorable Mayor, City Council, and Ryan Schroeder Preliminary Levy Adoption Pa9e 2 of 3 value so this means that the majority of the property owners will experience increases of 12% in taxable market value. The resulting tax impacts will be a home valued at $175,000 for 2004 will experience an increase of approximately $100 per year, or 17.3%. As discussed during the budget workshops the biggest challenge during this budget year was reacting to the reductions in state aid. The reduction in state aid we will experience for 2004 is $965,966, of which, we are permitted to increase the property tax levy by 60°/a (or 579,580) over the 2003 levy. Other than being able to increase the levy for a portion of the lost state aids there are no otner provisions for increasing the levy for growth or inflation. Over the past few months the City Council and staff have been meeting to discuss the 2004 budgets and the attached resolutions are the result of these meetings. Property Tax Levy Summary The preliminary levy adopted included an increase of 8.2% or $739,900, which is approximately equal to 60°/a of the loss in state aids ($579,580) plus the increase required for debt service ($160,300). The increase in debt service is due to the first year of debt service for the 2 phase of the Thompson Grove pavement management district. Geuera] Levies — Subject to Lery Limits General Fmd Lery Equipment Fund EbA Grey Cloud Bridge CGTAP �irove Plaza Debt Reduction Ice Arena Sub-Total (subjec[ to levy limit) increase ova previous year 2003 Final Levy 2004 Prelua Levy with chanQes 7,440,500 $ 8,181,000 50,000 - 125,000 9Q000 9,900 9,400 32,100 32,100 - 135,500 235,500 24,000 $ 7,893,000 $ 8,472,000 5.67% 734% Specia] Levies not Subject to Lcvy Limits Pavement Management Bonds 886,100 1,041,000 EDA Public Project 259,000 265,000 $ 1,145,100 $ 1,306,000 increasc ova prcvious yeaz 14.94% 14.05% TOTAL 9,038,100 9,778,OG0 Pezcent increase over prior yeaz 6.�6% e.i9% 2004 Operating Budgets As the budget currently stands the General Fund expenditures exceed the revenues by $81,195. It will be necessary to reduce expenditures further or increase revenues to get to a balanced budget, in addition to the remaining deficit of $81,000 the council also wanted to "revisiY' two budget items that were not decided on prior to the September meeting. They were; 1) not filling the City Engineer position — this would save approximately $45,000, net of offsetting revenues 2) Honorable Mayor, City Council, and Ryan Schroeder Preliminary Levy Adoption Page 3 of 3 the addition of an additional Police O�cer / Paramedic position, this would add approximately $63,000 in additional costs for 2004. Action Requested Provide staff with direction on the action to be taken on the expenditure budget and total amounts levied in preparation for the truth in taxation hearing to be held