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Home My WebLink About2012-09-05 PACKET 08.B.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # 920 AQ DATE 09/05/12 00 Finance ORIGINATING DEPARTMENT Robin Roland DEPARTMENT HEAD COUNCIL ACTION REQUEST Consider adoption of proposed preliminary 2013 property tax levy and proposed preliminary 2013 budget. STAFF RECOMMENDATION Adopt the attached resolutions: • Adopting the proposed preliminary 2012 tax levy collectible in 2013. • Adopting the proposed preliminary 2013 budget. BUDGET IMPLICATION N/A N/A BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES /RIGHTS ❑ ECONOMIC DEV. AUTHORITY El SUPPORTING DOCUMENTS DATE ® MEMO /LETTER: ® RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: REVIEWED APPROVED DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ADMINISTRATORS COMMENTS P' " City "Administrator Date COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER H: \Council items \City Council Action Form.doc City of Cottage Grove Memo Finance Department TO: Honorable Mayor and City Council Ryan Schroeder, City Administrator FROM: Robin Roland, Finance Director r DATE: August 30, 2012 LL � RE: Adoption of Preliminary Property Tax Levy for Taxes Payable in 2013 Introduction The City is required to adopt a preliminary levy each year by September 15 This preliminary levy will 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. Property Tax Levy Summary Staff believes the preliminary 2013 tax levy meets the two goals stated by the City Council at the Budget goals workshop on May 16, 2012: that the levy remain unchanged from the amount levied for 2012 and that the City's tax extension rate would continue to be slightly below the "mean" tax extension rate of the 36 cities to whom we compare ourselves. B The 2013 preliminary levy proposed includes a 0.0% increase. General Levies General Fund MVHC unallotment Park shelter replacement /Landsc Future Municipal buildings Economic development Debt reduction Future Pavement Mgmt Total levy subject to Debt Levies Ice Arena expansion bonds Debt service mitigation Public Safety /City Hall building b All Pavement Mgmtdebt Total debt Total Gross levy Chanae in Gross levy Adopted Adopted Adopted 2010 2011 1 2012 $ 10, 213, 300 '% $ 10, 345,100 $ 10, 929,100 584,000 584,000 initiative 106,000 106,000 5 Proposed Preliminary 2013 1 2014 $ 10,867,000 $ 11,561,860 30,000 30,000 30,000 30,000 108,100 108,100 903,300 11,035 100 11,035,100 11,035,100 240,000 240 240,000 240,000 346,400 346,400 550,000 . 1,011,700 619,750 1,251,700 1,206,150 12,155,000' 12,241,250 -2.34% 0.71% 619,750 416,150 1,206,150' 1,206,150 12,241,2501 12,241,250 0.00% 0.00% 11,729,960 240,000 550,000 341,000 1,131,000 12 860,960 5.06% Preliminary Tax Rates The City's estimated tax capacity value will decline by roughly 8% in 2013; from $27,439,784 (2012) to $25,516,548 (2013). Therefore, despite no increase in the tax levy, the tax extension rate can be expected to increase from 41.4% in 2012 to 44.8% in 2013. Staff believes that this tax extension rate increase will be consistent with that which other cities experience due to the continued decline in taxable valuations. However, due to uncertainty among our peer cities, getting actual comparison rates to verify this theory has been problematic. Tax Extension Rates 46.00 -- 44.00 .8 42.00 - 41.42 40.00 38.00 — -- 9 34.64 36.00 _ 39.17 3 7sJ3 34.00 w 1 -- 32.00 - 30.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tax Payable Year 2013 Operating Budgets General Fund Currently the attached general fund budget is in a "balanced state" - revenues equal expenses. The following items are of note: • Council Contingency -the preliminary budget includes an expenditure line item for council contingency of $0 for 2013 and $15,720 for 2014. • Cost of Living Increases — T he cost of living increase is 2% for 2013 and 2% for 2014. • Admin Charge to Enterprise Funds — The admin charge to the enterprise funds (water, sewer, storm water and street light utilities) remains constant for 2013 and 2014; it respectively totals $520,710 in the general fund. • Charges for services — both 2012 and 2013 continue to reflect reductions in engineering, administration and financing fees collected on developments due to the lack of anticipated development activity. • Investment earnings— Investment earnings have been calculated at 1.5% for 2013 and 2014. • PERA Changes budget amounts include no additional increases in the PERA rates for 2012 or 2013. PERA rates are statutorily determined. Current mandated employer contribution rates are 7.25% for those employees in the Coordinated plan and 14.40% for employees in the Police and Fire plan. Police Officer / Paramedic Allocation- The allocation of the Police Officer /Paramedic time to the ambulance fund remains at 12 %. A shift started in 2006 to more accurately reflect actual time spent on EMS calls over a straight allocation method used in years prior. The 12% allocation represents an approximation of the officer time spent on EMS calls according to the department. Fuel Allocation- The 2013 budget includes an assumption of $3.35 per gallon for gasoline and diesel. This represents an increase from $3.25 in the 2012 budget amounts. Special Revenue Funds Equipment Replacement Fund The budget includes a five year equipment replacement plan totaling $3.5 Million, along with the funding source. A summary list of purchases by year is included totaling $1,219,300 for 2013 and $613,100 for 2014. The 2013 equipment purchases include: Unmarked Investigations sedan (Police) Grass /brush firefighting vehicle (Fire) Two (2) Single Axle Dump trucks (streets) One ton dump body (streets) Street sweeper (Streets) Spray injection patcher (Streets) Crash Attenuator (Streets) Snow blower Loader (Snow) 4WD pickup truck (Parks) 11 foot mower (Parks) Trash Truck (Parks) One ton truck (Stormwater) Seal Coating Fund After the Franchise fee increase in 2010 and the switch to a seven year program, expenditures in this fund increase by 15.9% in 2013 and by an additional 4.2% in 2014. Ice Arena Expenses include the purchase of a new Point of Sale hardware /software system and water heaters for each of the North and South rinks. Recycling The revenue is the recycling grant amount expected to be received from Washington County. EDA and Economic Development Trust Funds The EDA property levy increases slightly over the 2012 levy to $108,100. Utility and Enterprise Funds Storm Water Utility Fund The rates remain at the level of $48 per residential customer for 2013 and are consistent with the storm water utility plan presented in 2008 which included scaled back storm water utility projects to match the revenue source. Water Fund The 2013 capital outlay includes replacement of a 4WD pickup truck, purchase of a trailer mounted pressure washer and portable air compressor and expenses for the 2013 Pavement Management project. Furthermore, fund expenses also include the beginning of a water meter replacement program. The fund is projected to have a net loss of $35,620 in 2013. Sewer Fund Staff is proposing no increase of the Sewer rate, despite continued growth in Met Council sewer services charges. The 2013 and 2014 budgets include capital outlay items from the respective pavement management projects for those years. Street Light Fund These rates decreased in 2010 to help mitigate the increases in the franchise fee and other utility rates. 2013 rates are not proposed to increase. However, there are net losses projected in 2013 and 2014. Golf Course Fund Assumptions have been made that revenues will increase by 1 % each in both 2013 and 2014. Although expenses will decrease in 2013, deficits are still predicted in both years due to a combination of capital outlay items and other financing charges. Staff will continue to monitor this operation very closely and provide strategic options to the Council and EDA. Ambulance Fund The budgeted revenue includes an increase of 6.25% in the rates. The fund is projected to have a loss of $63,320 in 2013 and $38,070 in 2014. Rates would have to increase by 25% for the fund's budget to show a break even. Population and call trends indicate more than 70% Medicaid and Medicare. Once the preliminary levy is adopted, City staff will certify the amounts to Washington County and the County will prepare the notices to be sent to individual property owners in November. The notices will identify the proposed taxes paid by each property owner based on the property's classification. In addition, the notice will identify the meeting date (December 5th) when public comment on the levy and the budget will be taken. Action Requested Adopt the attached resolutions: • Adopting the proposed preliminary 2012 tax levy collectible in 2013. • Adopting the proposed preliminary 2013 budget. RESOLUTION NO. 12- RESOLUTION ADOPTING THE PROPOSED 2012 TAX LEVY COLLECTIBLE IN 2013 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 2013, upon the taxable property in the City of Cottage Grove for the following purposes: General Levy General Fund $ 10,867,000 Park shelter replacement 30,000 Future municipal buildings 30,000 Economic Development 108,100 Subtotal General Levy 11,035,100 Debt Levies Ice Arena Expansion 240,000 Pavement Management - 08 175,000 PS /CH building bonds 550,000 Pavement Management — 2000 159,550 Pavement Management - 2011 81,600 Subtotal Debt Levy 1,206,150 Total Property Tax Levy $ 12,241,250 Passed this 5th day of September 2012. Myron Bailey, Mayor Attest: Caron Stransky, City Clerk RESOLUTION NO. 12- RESOLUTION ADOPTING A PROPOSED 2013 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, 2012. NOW THEREFORE BE IT RESOLVED, the City Council of the City of Cottage Grove, County of Washington, State of Minnesota, hereby certifies the proposed 2013 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, 2012, Expenditure or Expense and Transfers Out $ 13,469,530 71,620 746,300 24,900 1,221,610 258,645 1,219,300 714,250 430,000 3,109,870 2,895,540 1,585,620 1,772,260 Revenues and Transfers In General Fund $ 13,367,080 Recycling 53,150 Storm Water Utility 643,400 Forfeiture 56,000 Ice Arena 1,147,500 Charitable Gambling 1,500 Economic Development Authority 167,600 Equipment Replacement 255,970 Sealcoating 553,100 EDA Trust Fund 25,000 Water Operating 2,490,650 Sewer Operating 2,318,700 Street Lighting 611,100 River Oaks Golf 1,569,800 Expenditure or Expense and Transfers Out $ 13,469,530 71,620 746,300 24,900 1,221,610 258,645 1,219,300 714,250 430,000 3,109,870 2,895,540 1,585,620 1,772,260 Expenditure or Revenues and Expense and Ambulance Self Insurance Fleet Service Information Services Transfers In Transfers Out 1,375,600 1,468,770 1,347,700 1,455,835 1,080,000 1,063,460 378,010 368,860 $ 27,441,860 $ 31,876,370 Passed this 5th day of September 2012. Myron Bailey, Mayor Attest: Caron Stransky, City Clerk