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Home My WebLink About2011-05-18 PACKET 12.B.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # DATE 5118111 PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD COUNCIL ACTION REQUEST Workshop : 2012 & 2013 Budget STAFF RECOMMENDATION BUDGET IMPLICATION BUDGETED AMOUNT ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES /RIGHTS ❑ ECONOMIC DEV. AUTHORITY DATE REVIEWED El El ❑ ACTUAL AMOUNT APPROVED DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS ® MEMO /LETTER: Roland 5/13/11 ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS ,x I Date COUNCIL ACTION TAKEN: [ ❑ DENIED ❑ OTHER H: \rroland \Council items \City Council Action Form.doc City of Cottage Grove @1'1'10 Finance Department To: From: Date: Honorable Mayor and City Council Members Ryan Schroeder, City Administrator Robin Roland, Finance Director May 13, 2011 Subject: 2012 and 2013 Budget direction workshop We are embarking on the annual budget process for the coming two year cycle. This workshop will address Council direction and targets which in turn will guide department heads and city staff in the preparation of the 2012/2013 proposed budget and tax levy. For the 2011 budget, Council's guidance was clear; that the dollar amount of City taxes paid by the owner of an "average" property would be no more in 2011 than in 2010 and that the City's tax extension rate would continue to be at the "mean" tax extension rate of the 36 cities to which we compare ourselves. As the following chart reflects, the dollar amount of "City taxes" on an "average" property did remain relatively the same from 2010 to 2011. The chart also reflects Washington County's "first glance" estimate for Pay 2012 tax capacity value as a decline of 1.7% for residential and commercial /industrial properties. If this prediction is accurate, and we use the 2012 levy as it was presented in the 2011/2012 budget, the taxes paid by an "average" property would remain at (effectively) the same level as 2011. Council may wish to continue using this target for the 2012/2013 budget. 2007 2008 2009 2010 2011 2012 Tax Levy (after Fisc Disp) $ 10,273,472 $ .10,473,487 $ 10,545,890 $ 10,139,218 $ 10,163,171 $ 10,216,873 Tax Capacity value $ 28,708,347 $ 29,764,369 $ 30,445,931 $ 28,690,900 $ 26,678,583 $ 26,225,048 Tax Rate 38.81 % 35.19% 34.63% 35.42% 38.25% 38.96% Value of "average home" $ 231;900 $ 244,300 $ 243,900 $ 228,000 $ 207,400 $ 203,874 City taxes $ 900 $ 860 $ 845 $ 808 $ 793 $ 794 % tax change 6.9% -4.5% -1.7% -4.4% -1.8% 0.1% Continued moderation of the tax levy rate in relation to peer cities is reflected in the following chart. Tax Rate Comparison Metro Cities 17,000 to 60,000 population City name 2010 Tax Rate 2011 Tax Rate % change City name 2010 Tax Rate 2011 Tax Rate % change Edina 22.67 24.66 8.78% Inver Grove Heights 30.41 43.17 41.96% Minnetonka 30.74 33.51 9.01% Fridley 30.17 36.99 22.61% Eden Prairie 28.51 31.03 8.84% White Bear Lake 16.50 17.70 7.27% Golden Valley 48.18 1 53.06 10.13% Oakdale 32.98 35.87 8.76% Chanhassen 25.18 26.60 5.64% Apple Valley 39.29 42.39 7.89% Maple Grove 33.79 36.71 8.64% Andover 36.88 38.41 4.15% Woodbury 30.90 34.92 13.01% Cottage Grove 35.40 38.25 8.05% Roseville 27.27 29.76 9.13% Ramsey 37.69 39.80 5.60% Prior Lake 29.39 30.71 4.49% Richfield 47.95 54.98 14.66% Shoreview 28.07 30.67 9.26% Hastings 47.66 55.20 15.82% Shakopee 33.40 34.73 3.98% New Hope 45.72 48.94 7.04% Maplewood 35.30 39.05 10.62% New Brighton 36.70 37.87 3.19% St Louis Park 36.83 41.46 12.57% Chaska 21.88 23.48 7.31% Rosemount 39.97 44.66 11.73% Champlin 34.96 39.21 12.16% Lakeville 33.99 38.25 12.53% Crystal 44.11 47.35 7.35% Savage 47.47 48.28 1.71% South St Paul 37.29 48.37 29.71% Lino Lakes 37.81 42.04 11.19% Anoka 40.36 43.02 6.59% Blaine 29.82 32.80 9.99% Brooklyn Center 52.37 57.22 9.26% Averages 35.21 38.92 10.53% Staff's projection in 2010 that, given the continued erosion of State aids (LGA and MVHC) and the continued decline of market values across the seven county metro area, all cities in our peer group would show stable or increased tax rates in 201,1 turned out to be an accurate one. As is apparent on the chart above, the City of Cottage Grove's tax rate change from 35.40% to 38.25% (an 8% increase) is less than the average increase of 10.53 %. Cottage Grove's tax rate is now less than the mean (average) for the comparison cities. Previously adopted and future planned tax levies are identified in the next chart. Specific discussion at the workshop will involve future required debt levies for potential city building projects. Amended Adopted 1 Adopted 1 Proposed 1 Proposed 2009 201 2011 2012 2013 General Levies General Fund hIVi1TP.N11 a . l eirI -TIN Park shelter replacement/Landscape ini Future Public Safety /City Hall Economic development Grey Cloud Bridge Debt reduction Future Pavement Mgmt Ice Arena $ 10,338,000 $ 10,213,300 $ 10,345,100 $ 10,358,800 $ 10,358,800 584,000 584,000 584,000 584,000 100,000 20,000 20,000 Ice Arena expansion bonds 20,000 20,000 119,000 106,000 106,000 106,000 106,000 20,400 127,500 80,000 Total levy subject to limit 10,657,400 10,903,300 11,035,100 11,088,800 11,088,800 Debt Levies EDA public project 140,000 Ice Arena expansion bonds 240,000 240,000 240,000 240,000 240,000 Debt service mitigation 127,500 346,400 Public Safety /City Hall building bonds 500,400 670,400 Pavement Mgmt 2008 290,000 180,000 175,050 175,700 175,700 Pavement Mgmt 1998 215,300 Pavement Mgmt 2000 19,200 29,306 41,000 120,000 126,500 Pavement Mgmt 2002c 274,200 334,894 403,700 Pavement Mgmt 2003b 234,500 232,300 Pavement Mgmt 2002b 248,400 235,200 Pavement Mgmt 2010/2011 170,000 170,000 Total debt levy 1,789,100 1,251,700 1,206,150 1,206,100 1,382,600 Total Gross levy 12,446,500 12,155,000 12,241,250 12,294,900 12,471,400 Change in Gross levy 2.15% -234% 0.71% 0.44% 1.44% As we did last year at the workshop, we will use the Five year Financial Management model to show the impacts of changes in tax levy and other revenue, debt service requirements and capital projects. Staff seeks specific direction on the 2012/2013 budget process in the following areas: • Rate of tax levy growth: is the existing 2012 proposal appropriate? What about 2013? • Rate of general fund expenditure growth: is the assumption of 3% growth in 2012/2013 expenditures too high, too low or just right? • What capital projects need to be accounted for in the growth in the levy? The current model includes the PS /CH project: should it also include a Community Center? At what funding or dollar level? Although we could provide scenarios in this memo from which Council could choose, staff believes that use of the interactive Financial Model will clarify choices and provide valuable feedback to staff as we begin the budget process. A budget development schedule is also included for Council's review. Target Date Responsible party Action May 18, 2011 Council Discussion of budget goals at workshop May 19, 2011 Finance Budget Kick -Off Meeting/ Distribute form June Finance Tax Revenue forecasts June 17, 2011 Departments Return forms to finance Week of June 20, 2011 Budget team Preliminary review June 28 & 29 Budget team and Review meetings Departments July 7, 2011 Budget team and Final review meeting Departments July 27, 2010 Finance Proposed Budget Document to Council August 1, 2011 MN Dept of Revenue Final levy limit, HACA and LGA August 3 & 17, 2011 Council Budget workshops - Council review & comment September 7, 2011 Council Adopt preliminary levy and budget By September 15, 2011 Finance Certify preliminary levy and comment hearing date November 2011 County Mails notice of proposed property taxes for next year taxes payable December 7, 2011 Council Conduct budget comment meeting December 21, 2011 Council Adopt final budget and levy By December 29, 2011 Finance I Certify final levy