HomeMy WebLinkAbout2014 Budget Document - TNT Hearing
City of Oak Park Heights
2014 Annual Budget
Page 1
2014 Annual Budget
Table of Contents
City Officials 3
Budget Process 4
General Fund Revenues 6
General Fund Expenditures 7
Tax Levies, Tax Capacity and Tax Capacity Rate 9
Utility Fund Revenues and Expenditures 13
Debt Service Funds 14
Budgeted Projects Fund 15
Exhibit A- Summary of Changes to Tax Levy 2014
Exhibit B-General Fund Revenue and Expenditure Summary
Page 2
Oak Park Heights City Officials
PositionTerm Expires
Mayor Mary McComber 12/31/2016
Councilmember Chuck Dougherty 12/31/2016
Councilmember Mike Liljegren 12/31/2014
Councilmember Mike Runk 12/31/2016
Councilmember Mark Swenson 12/31/2014
City Staff
Eric A. Johnson – City Administrator
Betty Caruso – Finance Director
Brian DeRosier – Police Chief
Andrew Kegley– Public Works Director
David Mol – City Auditor
Mark Vierling – City Attorney
Christopher Long – City Engineer
Page 3
Budget Process
The annual budget process is a thorough review of all City revenues and expenditures for the
current and upcoming year. There are many uncontrollable factors the City must comply with
that affect both the amount of revenues the City receives and the amount the City must
expend in order to provide the current level of services. There are also numerous unfunded
mandates the City must comply with, such as:
Revenues
Tax exempt property – City must still maintain police/fire protection, streets, etc.
Limitations of local special assessments.
Local improvement feasibility reports requirements.
Limitation of maximum penalties and fines for ordinance violations.
Truth in taxation requirements.
Limitation on fees for licenses, i.e. off-sale and Sunday on-sale liquor, fireworks.
Expenditures
Pay equity, implementation and reporting.
Worker’s compensation.
Public pensions.
Continuation of health and life insurance coverage.
Prevailing wages paid on public contracts.
Veteran’s preference.
Mandatory binding arbitration for employee classes such as police and firefighters.
Various public safety requirements i.e. Peace officer standards and training,
confined space entry, suspense file reduction, tobacco compliance checks.
Building code administration and limits to permit fees for minor improvements.
Numerous environment requirements i.e., wastewater treatment standards Wetland
Conservation Act, recycling programs, waste collection practices, drinking water
standards, surface water management plans, Federal Clean Water Act, Wellhead
Protection, Wastewater permit requirements, and storing of hazardous substances
reporting.
Planning requirements for land use, zoning, building codes.
Comprehensive plan updates.
●
Conducting elections including paying judges, absentee ballots and recounts.
Record keeping requirements for Data Practices Act and retention schedules.
Competitive bidding.
Open Meeting Law notices, agendas and minutes.
Various financial reporting requirements, i.e. budget, audit reports, TIF reports,
building inspection fee reporting, business subsidy reports, outstanding debt
reports, continuing disclosure reports.
Budget Process
Page 4
The City Council and staff engage in a thorough budget process each year in order to present
a fair and balanced budget for the citizens of Oak Park Heights.
1. The annual budget process commences in June/July of each year with the Finance
Director distributing budget worksheets to the department heads for completion. The City
Council is requested to inform the Finance Director of any special requests they may have
for the budget.
2. The department heads determine the anticipated expenditures and budget requests for the
upcoming year. These requests are submitted to the Finance Director and Administrator
for review by the end of July.
3. The Finance Director compiles a draft of the preliminary budget and submits it to the City
Council.
4.The City Council schedules workshops for discussion and review of the preliminary
budget. There are usually 2 to 3 workshops held during the month of August and the first
week in September. All workshops are public meetings and the public is welcome to
attend.
5.After all input and requests have been considered, the Finance Director makes revisions to
the preliminary budget and submits it to Council for approval of the proposed budget and
tax levy. Per Minnesota State Statute this must be completed and certified to the County
no later than September 15.
6.The City Council sets the date for the Truth in Taxation meeting requirements. The City
is required to hold a meeting in which the public is allowed to speak and the budget and
levy is discussed. The hearing may be a part of a regularly scheduled meeting. The dates
must be certified to the County no later than September 15.
7.
Council conducts additional workshops to discuss any additional changes to the budget
due to updated revenue and/or expenditure information, i.e. insurance rates, contract fees,
etc.
8.The Truth in Taxation meeting is held.
9.The final budget and levy must be certified to the County by December 28, 2013 and to
the Minnesota Department of Revenue after the levy is adopted.
Page 5
General Fund Revenues
The City increasingly needs to rely on tax revenue to fund the City’s budget. The dependence
has continued to grow which has resulted in the 2014 proposed tax levy and other related
taxes to be 93.71%% of the City’s total proposed revenue. There are several factors that
contribute to this change:
Revenues from Licenses and Permits have decreased;
The City has reduced the Water and Sewer utility fund administration fee from 7% to
0% of the current utility expenditures. This change in policy was effective in 2012.
Interest earnings have decreased.
Intergovernmental Revenue continues to decline.
The following chart shows the shift in revenue sources over the past four years.
ActualActualBudget Budget
2011201220132014
Taxes-Levy86.6%89.1%94.1%93.7%
Licenses/Permits3.2%3.5%1.0%1.0%
Fines and Forfeits1.4%1.2%1.0%0.9%
Intergovernmental Revenue2.4%1.7%1.5%1.5%
Charges for Services1.9%0.3%0.2%0.8%
Other Revenue4.5%4.4%2.2%2.1%
General Fund Revenues
100.00%
90.00%
80.00%
Other Revenue
70.00%
Charges for Services
60.00%
Intergovernmental Revenue
50.00%
Fines & Forfeits
40.00%
Licenses/Permits
30.00%
Taxes
20.00%
10.00%
0.00%
Actual 2011Actual 2012Budget 2013Budget 2014
Page 6
The debt levy was included in the total tax levy in prior years but was not budgeted for in the
General Fund until 2012. For 2014, the debt levy of $559,000 was added to General Fund
Levy with a corresponding transfer expenditure of $559,000 to the debt service fund. The
actual and budgeted amounts 2011 are adjusted to show this change in policy and to reflect a
more comparable budget for analysis.
General Fund Revenue Summary
(2011 Adjusted for 2012 Changes in Budgeting Policy)
2013/2014
2011201220132014Budget
ActualActualBudgetBudgetInc (Dec)
Taxes
Operations$ 3,377,876$ 3,645,037$ 3,990,193$ 4,225,896 235,703
Debt Levy 524,000 536,000 548,000 559,000 11,000
Total Taxes$ 3,901,876$ 4,181,037$ 4,538,193$ 4,784,896$ 246,703
Other Taxes 71,646 64,323 65,500 67,000 1,500
Business Licenses-Permits 42,585 38,660 36,105 37,975 1,870
Non-Business Licenses-Permits 88,496 125,326 13,750 13,500 (250)
Fines & Forfeits 57,862 55,013 50,500 45,000 (5,500)
Intergovernmental Revenues 97,442 78,989 74,040 75,040 1,000
Charges for Services 81,428 11,822 8,680 43,748 35,068
Miscellaneous Revenues 186,791 207,864 106,650 110,650 4,000
Total Revenues$ 4,528,126$ 4,763,034$ 4,893,418 $ 5,177,809 $ 284,391
The total 2014 Revenue Budget is $5,177,809. This is an increase of 5.8% or $284,391 over
the 2013 Revenue Budget.
General Fund Expenditures
The Proposed 2014 budget for General Fund Expenditures is $5,177,809. This includes
expenditures for operations and capital projects/outlay. The 2014 operations budget is
$3,833,936 as compared to the 2013 operating budget of $3,658,553, a 4.79% increase.
Transfers for Debt Service and Capital Projects for 2014 are $1,343,873 and $1,847,460 for
2013. The 2013 Adopted Budget included Transfers of $1,311,460 and was amended to
transfer unallocated Fund Balance of $536,000 to fund expenditures for the St. Croix River
Crossing (SCRC) infrastructure. The increase of the Transfer expenditure for 2014 over the
Adopted 2013 Budgeted expenditure is 2.47%.
Excluding the Transfer for SCRC, the total 2014 Proposed Budget reflects an increase of
$207,796. The Operating Expenditures for 2014 increased $175,383 and the Proposed
Budgeted Transfers increased $32,413.
Beginning 2014 local government units are exempt from paying sales tax on most purchases.
This is estimated to save the City approximately $24,300.
Page 7
A summary of the General Fund Expenditures by category is a follows:
2013
20112012Amended20142013/2014
ActualActualBudgetBudget% Chg
General Government$ 1,150,892$ 1,138,674$ 1,333,307$ 1,484,065 11.3%
Public Safety 1,325,9311,379,1191,577,784$ 1,646,440 4.4%
Public Works250,910265,283395,954$ 351,275 -11.3%
Parks115,775119,956153,708$ 154,356 0.4%
Sanitation194,610194,704197,800$ 197,800 0.0%
General Operations$ 3,038,118$ 3,097,736$ 3,658,553$ 3,833,936 4.8%
Transfers-Capital678,240721,225$ 763,460$ 784,873 2.8%
Transfers-SCRC- - 536,000- -100.0%
Transfers-Debt134,000536,000548,000$ 559,000 2.0%
Total Transfers812,2401,257,2251,847,4601,343,873 -27.3%
Total Expenditures$ 3,850,358$ 4,354,961$ 5,506,013$ 5,177,809 -6.0%
The General Fund Expenditures are distributed as follows. This is reflective of operations
only and does not include the transfers to other funds.
ActualActualBudget Budget
2011201220132014
General Government37.9%36.7%36.5%38.7%
Public Safety43.6%44.5%43.1%42.9%
Public Works8.3%8.6%10.8%9.2%
Parks3.8%3.9%4.2%4.0%
Sanitation6.4%6.3%5.4%5.2%
The chart below indicates where the City will incur its expenditures in the 2014 budget year.
2014
Expenditure Distribution
Parks
Sanitation
General Government
4%
5%
Public Safety
Public Works
General
9%
Public Works
Government
Parks
39%
Sanitation
Public Safety
43%
For a list of department expenditures see Exhibit B- page 2, 2014 General Fund Expenditure
Budget Summary.
Page 8
Tax Levies, Tax Capacity and Local Tax Rate
Tax Levies
The proposed payable 2014 levy for the City of Oak Park Heights that was submitted to
Washington County for the TNT parcel specific notices was $4,784,896. This included the
total amount for the general obligation debt levies of $559,000. $448,443 of the debt levy
was included in the General Levy and $110,557 was levied under the Special Debt Levy.
Beginning in 2012 the City included the total Special Debt Levy in the General Tax Levy as a
planning strategy should levy limits be implemented by the state. This would allow the City
to build its tax base from which levy limits are calculated on. Prior to 2012, the City would
levy the debt for the G.O Bonds of 2008 as a Special Debt Levy. The G.O. Bonds of 2009 has
always been included in the General Tax Levy. The comparison levy for 2013 and 2014 is
as follows:
2013 2014 Increase
General Fund $3,990,193 $4,225,896 $ 235,703
Debt Levy added to Gen Fund 548,000 559,000 $ 11,000
Total General Fund Levy $4,538,193 $4,784,896 $ 246,703
A 3% levy limit was imposed for 2014. This limit allowed $448,443 of the $559,000
scheduled debt levy to be included with the general operational levy, however due to the levy
limit, the city could not include the full amount which required the Special Debt Levy to be
utilized for the balance. The total amount the city could have levied for 2014, (General and
Debt) is $5,233,338. This is $448,442 greater than the proposed levy. The following
spreadsheet explains the levy and the changes required in the General and Debt Levies.
LEVY LIMIT IMPACT
2013/2014 OPTIONS
PROPOSEDMAXIMUM
2010/20112011/20122012/20132013/2014LEVY
TAX LEVY -OPERATIONS
OPERATIONS 3,440,704 3,692,062 3,990,193 4,225,896 4,674,338
DEBT 134,000 536,000 548,000 448,442 -
TOTAL GENERAL TAX LEVY 3,574,704 4,228,062 4,538,193 4,674,338 4,674,338
SCHEDULED DEBT LEVY
2008 GO BONDS 390,000 400,000 410,000 420,000 420,000
2009 GO BONDS 134,000 136,000 138,000 139,000 139,000
SUBTOTAL 524,000 536,000 548,000 559,000 559,000
CANCELLED AND INCLUDED IN GENERAL OPERATIONS (134,000) (536,000) (548,000) (448,442) -
TOTAL SPECIAL LEVY FOR DEBT 390,000 - - 110,558 559,000
TOTAL TAX LEVY$ 3,964,704$ 4,228,062$ 4,538,193$ 4,784,896$ 5,233,338
BUDGET NEED
OPERATIONS 3,574,704 3,692,062 3,990,193 4,225,896 4,225,896
DEBT 390,000 536,000 548,000 559,000 559,000
TOTAL 3,964,704 4,228,062 4,538,193 4,784,896 4,784,896
OVER OR (UNDER) FUNDED - - - - 448,442
Page 9
A Summary of the proposed increase of the levy for 2014 is made up of the following
changes:
Changes in 2014 Tax Levy
Increase(Decrease)
In Tax Levy
Debt Service $ 11,000
Increase in Other Revenues (36,188)
Increase in Personnel Costs 31,538
Replacement Officer - Training Period 41,183
Increase in Health Insuance 60,297
Increase in Fire Contract 27,200
Increase In Snow Plowing 19,190
Increase in 2013 Actual Utility Expense 17,450
Increase in General Property Insurance 20,532
Increase in Materials and Contractual 26,810
Other Increases 6,278
Capital Projects 21,413
Total Change in Tax Levy$ 246,703
More detail of the changes can be obtained from Exhibit A-Summary of Changes to Tax Levy
2014.
Tax Capacity
The City’s estimated 2014 tax capacity value is $7,753,190. This represents a 1.91% decrease
in tax capacity value over the 2013 value of $7,904,706.
Tax capacity value is market value, adjusted for the Market Value Homestead Exclusion,
times the class rates. Class rates are established by the State of Minnesota and have not
changed since 2002.
The current class rates for residential property is 1% of taxable market value for the first
$500,000 of value and then 1.25% on the remaining value of the property – Example of a
$250,000 home’s tax capacity value calculation is as follows:
Market Value
Market Value Exclusion CalculationMarket ValueAfter MVHE
Market Value of Residential Home $ 250,000$ 250,000
Exclusion of the first $76,000 X 40%$ (76,000) $ (30,400)
Add Back Remaining at 9%$ 174,000$ 15,660
Taxable Market Value$ 235,260
Tax Capacity Calculation
Class Rate 1% Firs t $500,000 of Value$ 2,353
Class Rate 1.25% > $500,000$ -
Total Tax Capacity$ 2,353
Page 10
The current class rates for commercial property is 1.5% of market value for the first $150,000
of taxable market value and then 2% on the remaining value of the property – Example of a
$250,000 and a $600,000 commercial business tax capacity is calculated below.
Mkt Value Tax Cap Mkt Value Tax Cap
Commercial Property Mkt Value $250,000 $600,000
1.5% of first $150,000 (150,000) $2,250 (150,000) $2,250
Balance at 2% 100,000 2,000 450,000 9,000
Total Tax Capacity $4,000 $11,250
For 2012 the State repealed the Market Value Homestead Credit Program (MVHC) and
created a new Market Value Homestead Exclusion for qualifying homes. In place of the
MVHC, the homeowners receive an exclusion of a portion of the market value of their house
from the property taxes. The exclusion is computed in a manner similar to the market value
homestead credit.(40% of the first $76,000: $30,400-(EMV-$76,000)X .0009; Maximum
EMV $413,800) The impact of this change varies in each community. This calculation
reduces the total tax capacity of the city, reducing the total that is available to allocate taxes
on, therefore generally increasing individual tax bills.
The median market value for residential property is estimated to have increase by 1.1% for
2014 as compared to 2013. This minor increase has a minimal impact on the tax capacity for
residential property in 2014 as compared to 2013. Commercial Property values have
remained unchanged and the Public Utility has decreased by 2%.
The chart below shows the change in Total Tax Capacity Values from 2011 through Proposed
2014. The drop in value for 2012 is largely due to the change in the calculating of the Market
Value Homestead Exclusion.
8,400,000
8,200,000
8,000,000
7,800,000
7,600,000
7,400,000
2011201220132014
Tax Capacity Value
8,309,8447,823,1557,897,2887,753,190
The total decrease for 2014 is 1.8%. This decrease of tax capacity means there is less value to
allocate taxes and therefore a 0% increase in the tax levy would still increase the tax amount
due from the taxpayers.
Page 11
Local Tax Rate
The City’s Tax Rate for the general levy for 2014 is estimated to be 58.980% per $1,000 of
tax capacity value. This represents an increase of 7.4% from 2013 rates of 54.847%.
Local Tax Rates
T
60.00
A
50.00
X
40.00
R
30.00
A
20.00
T
10.00
E
0.00
2011201220132014
Tax Rate
45.02851.7154.89858.98
PAYABLE YEAR
The change in tax rate is calculated
Tax Rate 201354.898
Increases:
Tax Capacity Decrease0.901
Budget :
Debt Service0.142
Fee Increases 1.088
Personnel Costs1.715
Material and Supplies0.384
Capital Projects0.222
All Others0.096
Increase in Reveues-0.466
Total Budget Change3.181
Total Tax Rate - 201458.980
With the proposed General Fund budget of $5,117,809 supported by a tax levy totaling
$4,784,896, residential properties in the City will see an 8% increase in their city taxes. The
increase is a result of the increase in the market value and increase in levy. This increase is
equal to the same tax amounts for taxes payable 2012. See the following comparison of taxes
for a Median Value Oak Park Heights Residence.
Page 12
COMPARISON OF RESIDENTIAL TAXES 2011-2014
2011 2012 2013 2014
1
MEDIAN VALUE PER COUNTY $194,600 $187,900 $165,400 $167,200
INC (DEC) IN MKT VALUE
(PER COUNTY) -2.00% -3.10% -11.40% 1.10%
TAX CAPACITY $8,309,844 $7,823,155 $7,897,288 $7,753,190
TAX RATE 45.028 51.710 54.898 58.980
CALCULATED TAXES $783.25 $859.94 $785.29 $855.25
COUNTY MEDIAN VALUE HOME INCREASED TO $173,600
1
This variation is also due to the unique total tax capacity of the city that is shared by
residential, commercial and public utility on approximately 1/3 basis for each. The result of
this shared capacity for residential property means that 2/3rds of the tax burden is shared by
the commercial property along with the public utility, Xcel Energy. As the values change for
Commercial property along with the Fiscal Disparity Tax, and changes to the public utility
values, residential taxes will vary as seen in the chart above.
Utility Funds Revenues and Expenditures
The Water Utility Fund revenues are anticipated to remain the same for 2014 as in 2013.
Expenditures in the Water Utility Fund are anticipated to decrease by 3.14% for the year
2014. No increase in fees is expected. The rates remaining the same should absorb the
financial changes in the Water Fund. If the City issues Revenue Notes in 2014 to fund the
planned 2014 and 2015 Street Reconstruction, then a rate adjustment may be needed.
The Sewer Utility Fund revenues are anticipated to increase 3.46% for the year 2014. The
increase in revenue reflects a 3.5% increase in sewer rates needed to meet projected operation
and capital expenses.
Expenditures in the Sewer Utility Fund are anticipated to increase by 2.56% for the year 2014.
This is due to a 3.5% increase of the charges from Metropolitan Council Environmental
Services.
The Storm Sewer Utility Fund revenues are anticipated to increase 1.25% for the year 2014,
while expenditures are expected to increase 1.25%. There is no proposed change to rates for
2014.
Page 13
Utility Funds Revenues Summary
2013 2014 % Increase
Budget Budget (Decrease)
Water Utility Fund $665,900 $664,700 ( .2)%
Sewer Utility Fund $814,327 $842,500 3.46%
Storm Sewer Utility Fund $ 83,070 $ 84,110 6.1%
Totals $1,563,297 $1,591,310 .4%
Utility Fund Expenditures Summary
2013 2014 % Increase
Budget Budget (Decrease)
Water Utility Fund $646,456 $626,144 (3.14)%
Sewer Utility Fund $814,327 $835,180 2.56%
Storm Sewer Utility Fund $ 66,506 $ 68,502 1.25%
Totals $1,527,289 $1,529,826 .166%
Debt Service Funds
As of December 31, 2013 the City will have outstanding debt, including interest, in the
amount of $13,239,983 for the following bond issues:
1
G.O. Capital Improvement Bonds of 2008 $6,150,436
G.O. Capital Improvement Bonds of 2009 $ 871,620
G.O. CIP Refunding Bonds of 2012 $6,217,927
1
Will be paid off in 2016 with Advance Refunding Bonds of 2012.
The G.O. Capital Improvement Bonds of 2008 were issued in 2008 to provide financing for
the construction of the City Hall. This bond is scheduled to be repaid by a General Obligation
Debt Levy. The bonds were scheduled to retire in 2028. The city sold Advance Refunding
Crossover Bonds to prepay the bonds in 2016. This reduced the future scheduled tax levies
for debt by $495,000.
The G.O. Capital Improvement Bonds of 2009 were issued in 2009 to provide additional
financing for the construction of the City Hall. This bond is scheduled to be repaid by a
General Obligation Debt Levy. The bonds are scheduled to retire in 2019.
Page 14
Budgeted Projects Fund
The Budgeted Projects Fund was established to fund capital purchases for public works,
police, administration, etc. The revenues received in this fund are transfers in from the
General Fund and the Utility Funds. Revenue received for tree replacement and
occasionally revenue received as donations are also deposited in this fund.
For the year 2014 the City has budgeted transfers from the General Fund Budget in the
amount of $359,950 and transfers in from the Utility Fund in the amount of $113,432.
The anticipated expenditures for 2014 are for sealcoat/crack seal, park and trail
improvements and maintenance, tree planting, computers and software.
Page 15