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Home My WebLink About2007-09-05 PACKET 08.BREQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM #r DATE 9-5-07 C.� . PREPARED BY Finance Ron Hedberg ORIGINATING DEPARTMENT STAFF AUTHOR ��.�,��,�� COUNCIL ACTION REQUEST Adopt resolutions adopting the proposed 2008 budget and the proposed 2007 tax Ievy collectible in 2008 for the City of Cottage Grove. STAFF RECOMMENDATION Adopt resolutions as presented. BUDGET IMPLICATION SUPPORTING DOCUMENTS BUDGETED AMOUNT ACTUAL AMOUNT � MEMO/LETTER: � RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAI. RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS ��'" . �� ' City Administrator �s �.� �� *�°� Date �� COUNCIL ACTION TAKEN: APPROVED ❑ DENIED ❑ OTHER �� ° /� �� /� � J:\common\BUDGET\2008 budget\Memos\CC Action Form - 2008 prelim budget.doc °� '; �� TO: FROM: DATE: RE: City of Cottage Grove Finance Department Honorable Mayor and City Council Ryan Schroeder, City Administrator _ , Ron Hedberg, Director of Finance & Administrative Services Jesse Swenson, Management Analyst August 30, 2007 Adoption of 2007 Preliminary Budget and Property Tax Levy for Taxes Payable in 2007 Introduction The City is required to adopt a preliminary levy each year by September 15 the original budget calendar included plans to adopt the preliminary levy at the regular council meeting on September 7th. This preliminary levy is be used by Washington County to prepare the notices of estimated property taxes that are mailed to property owners in November. The preliminary levy may not be increased but can be reduced prior to December 28 when the final levy is required to be adopted. As discussed during the budget workshops the biggest challenge during this budget year was restricting the growth in the budgets as they relate to the downturn in the housing markets both in new construction but also the lower appreciation in values for 2008 than we have experienced in earlier years while maintaining a reasonable property tax levy. During the Council workshops direction was received that the property tax levy would increase a maximum of 3%. Over the past few months the City Council and staff have been meeting to discuss the 2008 budgets and the attached resolutions are the result of these meetings and includes a preporty tax levy increase of 3%. 2008 Operating Budgets The attached resolution adopts the 2008 preliminary operating budget for the Generai Fund, a number of Special Revenue Funds and the Enterprise Funds. The following budget additions are included in the General Fund Operating Budget. Honorable Mayor, City Council, and Ryan Schroeder Preliminary Levy Adoption Page 2 of 8 include: • ice v.rena • Storm WaYer UYiliYy • lJlo GIVIJ • CG EMS • CG EMS • CG EMS Net Saecial F 5,000 Lease of new Ice resurfacer 9,500 Equipment for catch basins and manholes to address OSHA 25,000 Electronic laptops and accessories 30,000 Part-time paramedic program (hire 8 PT i4.900) Adiust earamedic costs between EMS a Status of Council Contingency Beginning of budget process $ 30,000 Transfer of YSB funding to police (from Gambling fund) (7,000) Originai Budget surplus from preliminary budget 1,765 transferred to Council Contingency to balance budget $ 24,765 The budaet additions for the Special Revenue and Enterprise Fund Operatinq Budpe Honorabie Mayor, City Council, and Ryan Schroeder Preliminary Levy Adoption Page 3 of 8 Property Tax Levy Summary Following Council direction received throughout the budget process, the preliminary levy proposed includes a total increase of 3%, or approximately $362,000. Generai Levies — Subject to Levy Limits General F�nd Levy Future Pub. Safety / City Hall Building EDA Fiscal Dispairty'08 increase mitigaYion Grey Cloud Bridge Debt Raduction / Putnre PavemenY Mgmt Ice Arena Sub-Tbtal (subject Yo levy IimiY) increase over previous yeu 2007 Final Levy $ 9,175,050 650,000 121,000 127,000 7,800 I 80,000 I50,000 $ ]0,410,850 I4.4% 2008 Councii Prelim. Lew $ 9,620,000 450,000 106,000 7,300 ] 00,400 230,000 $ 1Q513,700 I.o% Special Levies not SubjecY to Levy Limits Pavement Management Bonds EDA Public Project inoeease over previous yeu TOTAL Percent iucrease over prior year Preliminary Tax Rates 1,14R,000 267,600 $ 1,411,600 S,5% 11,822,450 13.24% 1,394,500 275,800 $ 1,670,300 18.3% 12,184,000 3.06% Based on the estimated taxable property tax values and the levy amounts presented the tax extension rate will fall approximately 1.8% to 35.15°/o. For a residential property valued at approximately $230,000 which experienced an increase in taxable value of 2.2% the taxes paid in 2008 is estimated to increase approximately 0.6% over the amounts payable in 2007. Tax Extension Rates 50.00 45.00 40.00 35.00 30.00 Tax Payable Year 2002 2003 2004 2005 2006 20�7 2008 Honorable Mayor, City Councii, and Ryan Schroeder Preliminary Levy Adoption Page 4 of 8 Based on the preliminary levy, and assuming a residential property tax value went up 2.2% (the city-wide average) in taxable value for taxes payable 2008 the amounts of taxes to be paid and the estimated MV Homestead Credit received would be: 2.2% value increase 2007 Value 225,000 2008 Value 230,000 (22% increase) Increase (decrease) Provided MV HACA to City City Share of Share of Tax Net Taxes Taxes Bill Paid to City $806 $63 $74< $808 $61 $74� $2 0.25% -2. For a home valued at $230,000 for 2008 (that experienced a taxable market value increase of 2.2%, the average increase in total value) would pay approximately $4 or 1.1 % more in 2008 after the adjustment for the homestead credit. Of this increase, $2 is the reduction in the MV Homestead Credit. This sample home will receive 3%°/o less in MV Homestead Credit because of the increase in the value. In addition to the average home value increase of 2.2% if a estimated market value of a property didn't increase for next year the tax dollars paid will actually drop for 2008. According to the county assessor's report over 40% of the homes will experience a zero percent increase in value and another 20% actually experienced a reduction in the estimated market value. For a home valued at $230,000 for 2008 that did not experience a taxable market value increase, would pay approximately $16 or 2.1% less in 2008. Because the value did not change, the MV homestead credit also will not change for 2008. Zero % value increase 2007 Value 230,000 2008 Value 230,000 (zero °/a increase) Increase (decrease) Provided MV HACA to City City Share of Share of Tax Net Taxes Taxes Bill Paid to Citv $824 $61 $76: $808 $61 $74i Staffing The Council Preliminary Budget includes no changes to regular part-time or full-time positions. The trend in budgeted positions over the past 10 years shows an increase of approximately 24%, or 34 FTE's when including the hourly PT FTE's. The change in Public Safety includes reducing 5 full time positions when dispatch services were merged with Washington County. In addition to the staffing changes over the past few years operating efficiencies have been Honorable Mayor, City Council, and Ryan Schroeder Preliminary �evy Adoption Page 5 of 8 gained in many areas. The first table includes regular part-time, fuil-time, and hourly part-time employees. The hourly part-time employees have been converted for FTE's. The hourly part- time hours are actual hours of work from 1998 to 2006 and budgeted hours for 2007 and 2008. 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 General Government 23.45 21.12 21.24 21.71 21.62 22.02 22.09 22.58 23.56 24.02 24.02 Pubiic Safety 59.46 66.41 70.51 73.49 73.45 69.94 69.77 72.51 73.56 69.78 71.07 Public Works 50.82 54.40 55.18 56.16 58.93 56.39 56.86 58.60 60.44 63.04 62.89 Goif 11.39 16.63 22.80 23.76 27.30 27.19 24.50 21.89 19.78 21.82 21.82 145.12 158.56 169.73 175.11 181.30 175.54 173.22 175.58 177.34 178.65 179.80 PART TIME HOURLY FTE General Govemment Public Safety Public Works Golf 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0.32 0.49 0.61 1.45 1.41 9.49 0.96 1.10 1.82 1.19 1.19 6.93 12.88 16.88 17.96 18.27 76.61 15.44 15.88 16.16 17.38 18.67 9.82 13.40 14.28 14.78 15.55 11.41 11.88 12.42 14.26 96.36 16.21 8.39 13.63 18.70 18.76 22.30 22.19 19.50 16.89 14.78 16.82 16.82 25.46 40.40 50.47 52.94 57.53 51.70 47.78 46.29 47.02 51.74 52.89 The trend over the last 10 years has seen a significant increase in the part-time hourly employees FTE's. These employees consist of Public Works seasonal employees; Public Safety CSO's and Public Safety Fire & EMS employees; and seasonal Golf Course employees. Public Safety has had the largest increase in part-time hourly employees since 1998 with an addition of an equivalent 11.74 FTE's. The Golf Course has the next largest increase since 1998 with an addition of an equivalent of 8.43 FTE's that coincided with the opening of the clubhouse in 1999/2000. Public Works has added 6.39 equivalent FTE part- time hourly empioyees since 1998. While part-time houriy employees in the City have increased over 108% since 1998, regular full-time and regular part-time employees have only increased by 5.8%. Enterprise Funds The preliminary budget material presented previously proposed a slight increase in rates in the water. sewer. and storm water funds. • Water Funds - The rates were increased by $0.05 per 1000 gallons approximately 3% to cover increased costs in the fund, the largest of which is depreciation on contributed assets the developer instailed utilities. • Sewer Funds - The rates were increased significantly, by $0.20 per 1000 gallons, approximately 8.3% to cover increased costs in the fund as well as to reflect Iower sewer consumption being billed. The largest expense increase is in depreciation on contributed assets and increases in the Met Council Sewer charges. . Street �ipht Fund - The rates are anticipated to remain the same for 2008 at $4.17 per month. • Storm Water Utilitv Fund- The rates have been increased $6 per year per residential customer and staff will be presenting a storm water utility plan update later this fall that could include similar increases for 2009 and 2010 as well. This funding increase is needed to provide for increased levels of storm water maintenance activity. • Ambuiance Fund- the budgeted revenue includes an increase of 7% in the rates. The allocation of Police Officer / Paramedic time has been reduced from 15% to 12%; this Honorable Mayor, City Council, and Ryan Schroeder Preliminary Levy Adoption Page 6 of 8 has resulted in a reduction to the Ambulance Fund expense and an increase in the General Fund expense. Rate Comparison A rate comparison was done comparing the City of Cottage Grove water and sewer rates to 33 other cities 2007 rates. Our rates compare as follows: The comparison above demonstrates Cottage Grove's rate structure that encourages conservation. For lower consumption levels, Cottage Grove's charges are lower than the comparison cities in the 3,000 to 5,000 gallon categories, mainly because the other cities have minimum consumption charges. For nigher consumption levels, Cottage Grove charges a higher amount which in turn encourages conservation. Water and sewer rates have changed based on monthly rates since 2002 as follows: 2002 2003 2006 2007 2008 WaYer Base Charge 1.50 1.50 0 to 15,000 1.15 1.25 15,001 to 35,000 1.50 1.60 Over 35,001 170 1.80 1.50 1.50 1.50 1.40 1.45 1.50 1.75 1.80 1.85 1.80 2.00 2.10 Sewer Base Charge 1.00 1.00 1.00 L50 1.55 0 to 35,000 220 2.30 2.35 2.35 2.55 Over 35,001 2.40 2.50 2.55 2.55 2.80 Combined Water and Sewer Changes per Month 2007 Rates Honorable Mayor, City Council, and Ryan Schroeder Preliminary Levy Adoption Page 7 of 8 If Council approves the recommended water and sewer rate increases an "average" residenYs monthly utility bill in a single family home would increase approximately 5.2% as follows: zoo7 zooa Monthly Monthly % Utility Bill Utility Biil Change Water (9,000 galions) $14.55 $15.00 3.1% Sewer (5,000 gallons) 13.25 14.30 7.9% Street Light w/ maint 6.67 6.67 0% Storm Water 3.50 4.00 14.3% Total 37.97 39.97 5.2% Recap of Changes in fees and taxes. Based on a$230,000 value home (that experienced a 2.2% increase in taxable market value) and uses 9,000 gallons of water and 5,000 of sanitary sewer charges in a month would pay on a monthly basis approximately $105 in property taxes, franchise fees and utility charges per month. Property taxes (city portion only) Franchise Fees Water Charge Sewer Charge Streetlight Fee Stormwater fee Per Month 2007 2008 % increase $ 61.92 $ 62.25 0.5% 2.50 2.50 0.0% 14.55 15.00 3.1 °/a 13.25 14.30 7.9% 6.67 6.67 0.0% 3.50 4.00 14.3% $ 102.39 $ 104.72 2.3% Based on the changes proposed for fees and increase to taxes the total paid per month will increase $2.33 or 2.3%. Utility Budgets After the proposed increases to the water fund and sewer fund revenues and the changes in the expenses detailed above, a summary of the 2008 budget for the utility funds is as follows: Street Water Sewer Light Fund Fund Fund Revenue: Charges for services-user fees St. Light Maintenance Fee Penalties Interest Tower rent Other Transfers In Total Revenue 2,104,000 2,145,000 36,000 90,000 175, 000 47,000 69,200 2,521,200 36,000 185,000 17,500 475,200 80,000 7, 500 79,000 90,000 Storm Water Maintenance Fund 806,462 2,383,500 731,700 806,462 Honorable Mayor, City Council, and Ryan Schroeder Preiiminary Levy Adoption Page 8 of 8 Expenses: Administration Operating and maintenance MCES Sewer Charge Debt service Items for Resale Depreciation-P u rch ased Assets De preci ation-C ontri b uted Assets Transfers Out Total Expenses Net Income(loss) Water Fund 289,750 1,057,100 97,200 78,000 358,600 437, 300 2,317,950 203 250 Sewer Fund 304,150 363, 350 1,283,000 38,500 350, 500 29,200 2,368,700 � :�� Street Light Fund 41,300 358,700 90,000 7,700 106,700 9,000 613,400 118 300 Storm Water Maintenance Fund 52,350 650,900 703,250 i[�k�'� The utility enterprise funds include the following capital outlay items. SewerFund SCBA tank and Apparatus $5,700 Street Light Fund Repiace yeilow LED lights 14,000 Bead blaster 5,400 Remaining Schedule After the preliminary levy and budget is adopted the City will certify these amounts to the County and the County will prepare the Truth in Taxation Notices to be sent in November. These notices will identify the tax doliars that would be paid by each property owner based on each properties classification and notify the residents on the date of the Truth in Taxation hearing to be held in December. Action Requested Adopt the attached resolutions . Resolution adopting the proposed 2007 tax levy collectible in 2008 • Resolution adopting a proposed 2008 budget for the City of Cottage Grove. RESOLUTION NO. 07- ADOPT RESOLUTION ADOPTING THE PROPOSED 2007 TAX LEVY COLLECTIBLE IN 2008 NOW THEREFORE BE IT RESOLVED, the City Council of the City of Cottage Grove, County of Washington, State of Minnesota, that the following amounts are the proposed to be levied for the current year, collectible in 2008, upon the taxable property in the City of Cottage Grove for the following purposes: General Levv General Fund Economic Development Grey Cloud Bridge Debt Reduction/ Future Pavement Management ice Arena Future Public Safety/City Hall Subtotal General Levy Debt Levies EDA Public Project Pavement Manage. D/S Increase mitigation Pavement Mgmt — 02 Refunding ( 95/96) Pavement Management — 98 Pavement Management — 00 Pavement Management — 02 Pavement Management — 03 Subtotal Debt Levy Total Property Tax Levy Passed this 5 th day of September 2007. $ 9,620,000 106, 000 7, 300 100,400 230, 000 450, 000 10.513.700 275,800 407, 000 202,400 225,100 18,300 305,200 236,500 1,670, 300 $ 12,184,000 Sandra Shiely, Mayor Attest: Ryan Schroeder, City Administrator RESOLUTION NO. 07- ADOPT RESO�UTION ADOPTING A PROPOSED 2008 BUDGET FOR THE CITY OF COTTAGE GROVE WHEREAS, The City of Cottage Grove provides a variety of services to the residents of Cottage Grove; and WHEREAS, the funds to provide services are reviewed and appropriated by the City Council at public hearings, and WHEREAS, it is necessary to generate sufficient revenues to meet the financial obligations, and WHEREAS, existing law requires certification of the proposed budget to the County Auditor by September 15, 2007. NOW THEREFORE BE IT RESOLVED, the City Councii of the City of Cottage Grove, County of Washington, State of Minnesota, hereby certifies the proposed 2007 budget, and, BE IT FURTHER RESOLVED, the Finance Director is hereby instructed to transmit a certified copy of this resolution to the County Auditor of Washington County, Minnesota by September 15, 2007, General Fund Sealcoating Equipment Replacement Charitable Gambling Recycling Community Watch Forfeiture Ice Arena Economic Development Authority EDA Trust Fund Community Celebration Fund Expenditure or Revenues and Expense and Transfers In Transfers Out $ 12,587,575 $ 12,587,595 405,000 462,400 500,000 129,000 12,000 12,000 51,550 51,450 7,040 7,040 42,600 136,237 547,215 542,800 176,000 175,300 115,700 430,000 -0- -0- Water Operating Sewer Operating Ambulance Storm Water Utility Street Lighting River Oaks Golf Self Insurance Fleet Service 2,521,200 2,383,500 1,174,900 806,462 731,700 1, 697,200 1,283,200 1,001,300 $ 26,044,142 Passed this 5`" day of September 2007. 2,462,950 2,374,400 1,135,450 703,250 632,800 2,250,900 1,279,600 995,000 $ 26,307,905 Sandra Shiely, Mayor Attest: Ryan Schroeder, City Administrator