HomeMy WebLinkAboutTNT Hearing Documents CITY OF OAK PARK HEIGHTS
MONDAY, DECEMBER 6 2004
CITY COUNCIL MEETING AGENDA
5:00 P.M.
L Truth in Taxation Hewing
IL Special COandi Meeting
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• Kern Center Pond Expansion
III. Adjournment
City of Oak Park Heights
2005 Annual Budget
Page 1
2005 Annual Budget
Table of Contents
City Officials 3
Budget Process 4
General Fund Revenues 6
General Fund Expenditures 8
Tax Levies, Tax Capacity and Tax Capacity Rate 10
Utility Fund Revenues and Expenditures 12
Debt Service Funds 14
Budgeted Projects Fund 15
Page 2
n �
Oak Park Heights City Officials
Position Term Expires
Mayor David Beaudet 12/31/2004
Councilmember Les Abrahamson 12/31/2006
Councilmember Jack Doerr 12/31/2004
Councilmember Mary McComber 12/31/2004
Councilmember Mark Swenson 12/31/2006
Citv Staff
Eric A. Johnson — City Administrator
Judy Holst — Finance Director
Lindy Swanson — Police Chief
Tom Ozzello— Public Works Director
David Mol — City Auditor
Mark Vierling — City Attorney
Dennis Postler — 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.
• Veterans 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.
• 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, and Wastewater permit requirements.
• Planning requirements for land use, zoning, building codes.
• 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.
Page 4
Budget Process
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 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 dates for the initial Truth in Taxation public hearing and the
date for the continuation hearing. The maximum allowable levy for 2005 to qualify
for exemption from the Truth in Taxation public hearing is 1.015125% increase over
2004. The City did not qualify for exemption from the TNT public hearing
requirement. The dates must be certified to the County no later than September 15.
7. The proposed payable 2005 levy must be submitted to the Minnesota Department of
Revenue no later than September 30.
8. 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.
9. The initial 2004 Truth in Taxation hearing is held. The City must announce prior to
adjournment of the initial hearing the date, time and place of a continuation hearing,
if a continuation hearing is needed, or the date, time and place of a subsequent
hearing to adopt the final tax levy and budget.
Page 5
n.
General Fund Revenues
An important concern the City Council and the residents of Oak Park Heights should be
aware of is the trend towards relying more on the tax levy for the City's source of
revenue. In 2001 the tax levy consisted of 66.3% of the City's revenue source. The
proposed tax levy for 2005 is 80.5% of the City's revenue source. There are several
factors that contribute to this trend. The intergovernmental revenue has decreased from
7.8% to 3.2% of revenues. This was due to the discontinuation of HACA in 2002 and
Local Government Aid cuts in 2003, 2004, and 2005. The reduction in aids also resulted
in a reduction of the recycling grant that the City receives from the County.
The State has also limited the ability of Cities to increase fees for certain services, i.e.
off -sale liquor license fees, Sunday on -sale license fees, sale of fireworks fees, and permit
fees for minor improvements.
Actual Actual Actual Budget Budget
2001 2002 2003 2004 2005
Taxes 66.3% 74.6% 70.8% 77.1% 80.6%
Licenses/Permits 9.3% 7.4% 11.9% 7.3% 5.8%
Fines and Forfeits 2.8% 2.6% 2.2% 2.8% 2.2%
Intergovernmental Revenue 7.8% 3.3% 3.0% 3.3% 3.2%
Charges for Services 8.6% 7.6% 8.0% 5.9% 5.0%
Other Revenue 5.2% 4.5% 4.1% 3.6% 3.2%
General Fund Revenues
100.00 % .
90.00%
80.00% ..;Y gr
70.00% :..
�,_` � � �. � � ®Taxes
a
60.00 % „« ■ licenses /Permits
50.00%
❑ Fines & Forfeits
40.00%
❑Intergovernmental
30.00% Revenue
■ Charges for
20.00% ..;.. :, Services
yw �r; ' Other Revenue
10.00% � �..,:��:, ` >.�; ;��:.
0.00% .
Actual Actual Actual Budget Budget
2001 2002 2003 2004 2005
Page 6
The overall 2005 proposed revenue budget will increase by $460,722 or 18.5% over the
2004 revenue budget. This is the net amount of increase after the Market Value
Homestead Credit and the Local Government Aid cuts received from the State of
Minnesota for 2004 and the possible Market Value Homestead Credit cut for 2005 have
been deducted from the 2004 approved revenue budget and the 2005 proposed budget.
General Fund Revenue Summary
2004 2005 % Increase
Budget Budget (Decrease)
Taxes $1,919,203 $2,375,325 23.8%
Special Assessments 0 0 .0%
Business Licenses - Permits $23,815 $28,355 19.1%
Non - Business Licenses - Permits $158,000 $144,000 (8.7 %)
Fines & Forfeits $69,000 $66,000 (4.3 %)
Intergovernmental Revenues $81,778 $94,378 15.4%
Charges for Services $146,860 $146,620 (.2 %)
Miscellaneous Revenues $88.900 $93.600 5.3%
Total Revenues $2,487,556 $2,948,278 18.5%
The chart below shows the anticipated revenues for budget year 2005.
2005 Revenue Distribution
Charges for Services ■Taxes
5 °k
Intergovernmental Miscellaneous
Revenues OBusiness Licenses - Permits
3% Revenues
3 °
Fines &Forfeits ■Non - Business Licenses -
2% Permits
Non - Business Licenses. O Fines & Forfeits
Permits
5% ■Intergovernmental Revenues
Business Licenses-
Permits ■Charges for Services
1%
■Miscellaneous Revenues
Taxes
81%
While the City of Oak Park Heights is in good financial condition, the majority of our
long -term difficulties will be from outside sources, i.e. the City will be required to find
ways to manage future expenditures with less aid revenue.
Page 7
General Fund Expenditures
The City had not experienced a significant increase in General Fund expenditures over
the last 4 years. The 2001 actual expenditures were $2,432,864. The 2004 budget for
expenditures is $2,479,650. This reflects a 1.9% increase.
The major reason for the small increase from 2001 through 2004 is due to levy limits and
aid cuts imposed by the State of Minnesota. With the lifting of levy limits, the City is
now able to replenish their reserves and finance the capital projects that were suspended
due to the cut in State Aid.
The chart below shows the expenditures for years 2001 through 2005. For the year 2005,
General Government accounts for 32% of all expenditures. Public Safety accounts for
40% of all expenditures. Other expenditures, which include financing of capital projects,
account for 14% of all expenditures.
Actual Actual Actual Budget Budget
2001 2002 2003 2004 2005
General Government 41.1% 38.1% 34.8% 34.7% 31.9%
Public Safety 39.8% 42.6% 45.0% 45.8% 39.8%
Public Works 7.0% 5.7% 7.1% 7.1% 7.1%
Parks 5.1% 3.7% 4.2% 4.4% 4.0%
Sanitation 3.4% 3.8% 3.9% 3.6% 3.0%
Other Expenditures 3.6% 6.1% 5.0% 4.4% 14.2%
General Fund Expenditures
100.0% � M; .
General Government
80.0% w , ■ Public Safety
60.0% r ❑Public Works
40.0% ❑ Parks
■ Sanitation
20.0 % -
Other Expenditures
0.0 %-
Actual Actual Actual Budget Budget
2001 2002 2003 2004 2005
The overall 2005 proposed expenditure budget would increase by $468,625 or 18.9%
over the 2004 budget. The main contributing factors to the budget increase are financing
of capital projects, updating of the comp plan, increased dues for Coalition of Utility
Cities, and general inflation costs.
Page 8
General Fund Expenditure Summary
2004 2005 % Increase
Budget Budge (Decrease)
General Government 860,515 940,760 9.3%
Public Safety 1,135,025 1,174,815 3.5%
Public Works 176,265 209,880 19.1%
Parks 110,395 116,940 5.9%
Sanitation 88,500 88,500 .0%
Other Expenditures 108.950 417.380 283.1%
Total Expenditures 2,479,650 2,948,275 18.9%
The chart below shows where the City will make the majority of its expenditures in the
2005 budget year.
2005 Expenditure Distribution
Other Expenditures
14%
General Government ■ General Government
32%
Sanitation O Public Safety
3%
IN Public Works
Parks O Parks
4 °h
Public Works ■Sanitation
7%
■ Other Expenditures
Public Safety
40%
Page 9
Tax Levies, Tax Capacity and Tax Capacity Rate
Tax Levies
The proposed payable 2005 levy for Oak Park Heights is $2,448,825.
There is always the possibility the State will cut the Market Value Homestead Credit as
they did in 2003 and 2004. The City would only collect approximately $2,360,325 of
the Levy if the MVHC is cut.
As seen in the chart below, the City had a 24% increase in the tax levy for 2002, a 1.29%
increase for 2003, a. 0 1 % proposed decrease for 2004, and a 23% increase for 2005.
Tax Levy
3,000,000
2,500,000 A.
2,000,000
1,500,000 mF.
Y.�
1,000,000 f,z
500,000' k'
0
2001 2002 2003 2004 2005
Tax Capacity
The City's estimated 2005 tax capacity value is $5,964,396. This represents a 5.6%
increase in tax capacity value over 2004.
Tax capacity value is market value of the property times the class rates. Class rates are
established by the State of Minnesota and have changed periodically over the last 5 years.
The current class rates for residential property is 1% of market value for the first
$500,000 of value and then 1.25% on the remaining value of the property — Example of a
$600,000 home —
1% of first $500,000 = $5,000
1.25% of Balance ($100,000) _ $1,250
Total Tax Capacity $6,250
The current class rates for commercial property is 1.5% of market value for the first
$150,000 of value and then 2% on the remaining value of the property — Example of a
$600,000 commercial business —
1.5% of first $150,000 = $2,250
2% of balance ($450,000) _ $9,000
Total Tax Capacity = $11,250
Page 10
n
The chart below shows the change in Tax Capacity Values from 2001 through Proposed
2005. The change in tax capacity values from 2001 to 2002 reflects the change in class
rates established by the State beginning with the year 2002.
8,000,000--
°r`
6,000,000
=.'
4,000,000"
2,000,000
0
2001 2002 2003 2004 2005
ITax Capacity Value 6,795,389 4,773,711 5,569,968 5,622,052 5,964,396
Tax Capacity Rate
The City's Tax Capacity Rate for 2005 is estimated to be 39.293% per $1,000 of tax
capacity value. This represents an increase of 14.1 % from 2004 rates.
An increase or decrease in the amount levied for taxes combined with an increase or
decrease in market value or tax capacity value, result in the tax capacity rate changes. As
you can see in the chart below, the combination of an increased levy in 2002 along with
the class rate changes resulted in a 76% increase in tax rate for 2002. Although there was
a huge increase in tax rates, it did not result in a huge increase in actual tax. This was due
to the decrease in tax capacity values.
Tax Capacity Rates
60
50
40-,0-
30f�xv
20-,- S u
y 3g.
10
0
2001 2002 2003 2004 2005
Tax Rate 23.692 41.741 35.501 34.515 39.293
Page 11
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Utility Fund Revenues and Expenditures
The Water Department revenues are anticipated to increase 10.7% for the year 2005. The
increase in revenue reflects an increase in water sales due to new construction.
Expenditures in the Water Department are anticipated to increase 3.1 % for the year 2005.
The increase is due primarily to an increase in salaries, the addition of a new public
works position and inflation.
The Sewer Department revenues are anticipated to increase 9.2% for the year 2005. The
increase in revenue reflects an increase in sewer sales due to new construction.
Expenditures in the Sewer Department are anticipated to increase 5.4% for the year 2005.
The increase is due primarily to an increase in salaries, the addition of a new public
works position, Met Council sewer service charge and inflation.
The Storm Sewer Department revenues increased 1.5% for the year 2005. The revenue
increase is due to the development of vacant land within the City. Vacant land within the
city is charged a monthly rate of $.50 per month for residential property and $1.50 per
acre for undeveloped commercial, industrial and high- density residential property.
Expenditures in the Storm Sewer Department are anticipated to increase 4.6% for the
year 2005. The increase is due primarily to an increase in salaries, the addition of a new
public works position, contractual services and inflation.
The Sanitation Department revenues will increase . l % for the year 2005. The revenue
increase is due to additional pick -ups for residential garbage.
There are no expected changes in expenditures in the Sanitation Department for the year
2005.
Utility Fund Revenues Summary
2004 2005 % Increase
Budget Budge (Decrease)
Interest $15,000 $18,000 13.3%
Water Department $367,440 $406,605 10.7%
Sewer Department $576,540 $629,721 9.2%
Storm Sewer Department $69,070 $70,075 1.5%
Sanitation Department $186,100 $186,100 .0%
Totals $1,147,040 $1,214,150 7.8%
Page 12
Utility Fund Expenditures Summary
2004 2005 % Increase
Budget Budget (Decrease)
Water Department $369,260 $380,855 3.1%
Sewer Department $573,150 $604,240 5.4%
Storm Sewer Department $60,610 $63,375 4.6%
Sanitation Department $185,130 $185,130 .0%
Totals $1,188,150 $1,188,150 3.8%
Page 13
/'1
Debt Service Funds
As of December 31, 2004 the City will have outstanding debt, including interest, in the
amount of $1,713,932. This consists of the G.O. Refunding Bonds of 2002, G.O.
Improvements Bonds of 1998 and G.O. Refunding Bonds of 2001.
The G.O. Refunding Bonds of 2002 (formerly the Water and Sewer Revenue Bonds of
1991) were issued to provide financing for Phase I of the City's Annexation Area
Extended Trunk Facility Improvements. The City established special area connection
charges to provide for the retirement of these bonds and for financing additional trunk
facilities in this area. A portion of this bond is also being paid by special assessments.
The bonds are scheduled to retire in 2006. The City will have sufficient funds to pay the
remaining debt payments on this bond issue.
The G.O. Improvement Bonds of 1998 were issued in 1998 to provide financing for Kern
Center and Phase III of the 58 Street Improvements. This bond is scheduled to be
repaid by special assessments and connection charges. The bonds are scheduled to retire
in 2013. The City will have sufficient funds to pay the remaining debt payments on this
bond issue.
The G.O. Refunding Bonds of 2001 were issued to provide financing for the first phase
of the street reconstruction project. This bond is being repaid by a combination of special
assessments and a general debt levy on the property taxes. The bonds are scheduled to
retire in 2005. The City will have sufficient funds to pay the remaining debt payments on
this bond issue.
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 Fund. Revenue received for tree replacement and
occasionally revenue received as donations are also deposited in this fund.
For the year 2005 the City has budgeted transfers in from the General Fund in the amount
of $196,000 and transfers in from the Utility Fund in the amount of $24,900.
The anticipated expenditures for 2005 are for outdoor storage, parks, tree planting and
computers.
Page 15