HomeMy WebLinkAboutTNT Hearing Documents City of Oak Park Heights
2007 Annual Budget
Page I
2007 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
Oak Park Heights City Officials
Position Term Expires
Mayor David Beaudet 12/31/2008
Councilmember Les Abrahamson 12/31/2006
Councilmember Jack Doerr 12/31/2008
Councilmember Mary McComber 12/31/2008
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, 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, 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.
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 2007 to qualify
for exemption from the Truth in Taxation public hearing is 6.4187% increase over
2006. 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. 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 initial 2007 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.
9. The final budget and levy must be certified to the County by December 28, 2006 and
to the Minnesota Department of Revenue by December 29, 2006.
Page 5
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 2007 is 85% of the City's revenue source. There are several factors
that contribute to this trend. The intergovernmental revenue has decreased from 7.8% to
2.7% of revenues. This was due to the discontinuation of HACA in 2002, Local
Government Aid cuts in 2003, 2004, 2005 and 2006, and the discontinuation of the
recycling grant from Washington County in 2004. The City has also reduced the utility
fund administration fee from 10% to 7 %.
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 Actual Actual Budget Budget
2001 2002 2003 2004 2005 2006 2007
Taxes 66.3% 74.6% 70.8% 72.3% 71.2% 82.2% 83.6%
Licenses /Permits 9.3% 7.4% 11.9% 11.5% 11.7% 5.9% 5.6%
Fines and Forfeits 2.8% 2.6% 2.2% 2.9% 2.2% 2.1% 1.8%
Intergovernmental Revenue 7.8% 3.3% 3.0% 2.7% 3.3% 3.3% 2.7%
Charges for Services 8.6% 7.6% 8.0% 5.7% 6.9% 2.6% 2.0%
Other Revenue 5.2% 4.5% 4.1 % 4.9% 4.7% 3.9% 4.3%
General Fund Revenues
100.00%
90.00%
80.00%
70.00% ■Taxes
60.00% ■ Licenses /Permits
50.00 %_ ❑Fines & Forfeits
40.00% 0 Intergovernmental
30.00% Revenue
■Charges for
20.00% Services
10.00% ■Other Revenue
0.00%
Actual Actual Actual Actual Actual Budget Budget
2001 2002 2003 2004 2005 2006 2007
Page 6
The overall 2007 proposed revenue budget will increase by $435,553 or 15% over the
2006 revenue budget. This is the net amount of increase after the Market Value
Homestead Credit cut from the State of Minnesota for 2006.
General Fund Revenue Summary
2006 2007 % Increase
Budget Budget (Decrease)
Taxes $2,406,808 $2,809,655 16.7%
Special Assessments $0 $0 .0%
Business Licenses - Permits $30,340 $32,005 5.5%
Non - Business Licenses - Permits $142,000 $155,600 9.6%
Fines & Forfeits $62,000 $60,500 (2.4 %)
Intergovernmental Revenues $96,898 $91,984 (5.1 %)
Charges for Services $74,465 $68,200 (8.4 %)
Miscellaneous Revenues $115,270 $145,390 26.1%
Total Revenues $2,927,781 $3,363,334 14.9%
The chart below shows the anticipated revenues for budget year 2007.
2007 Revenue Distribution
Charges for Services
Intergovernmental 2% ■ Taxes
Fines & Forfeits R)nse
2% Miscellaneous E3 Business Licenses - Permits
Revenues
Non - Business Licenses. 4%
■Non- Business Licenses -
Permits Permits
5% U Fines & Forfeits
Busines
Pe ■Intergovernmental Revenues
■ Charges for Services
®Miscellaneous Revenues
Taxes
83%
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 experienced only a 2.6% increase in General Fund expenditures from 2001 to
2004. The increase in expenditures from 2004 actual expenditures to 2006 budgeted
expenditures was 17.5% . The 2007 budget for expenditures is $3,283,930; which
reflects in a 12.2% increase over the 2006 expenditure budget.
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 has
now replenished their reserves and are able to finance the capital projects that were
suspended due to the cut in State Aid.
The chart below shows the expenditures for years 2001 through 2007. For the year 2007,
General Government accounts for 33% of all expenditures. Public Safety accounts for
38% of all expenditures. Other expenditures, which include financing of capital projects,
account for 29% of all expenditures.
Actual Actual Actual Actual Actual Budget Budget
2001 2002 2003 2004 2005 2006 2007
General Government 41.1% 38.1% 34.8% 32.2% 29.5% 34.1% 32.5%
Public Safety 39.8% 42.6% 45.0% 44.6% 40.6% 41.2% 38.4%
Public Works 7.0% 5.7% 7.1% 6.8% 6.2% 7.7% 7.5%
Parks 5.1% 3.7% 4.2% 3.5% 3.5% 4.4% 4.1%
Sanitation 3.4% 3.8% 3.9% 3.6% 3.1% 3.0% 2.2%
Other Expenditures 3.6% 6.1% 5.0% 9.3% 17.1% 9.6% 15.3%
General Fund Expenditures
■ General
100.0% Government
80.0% ■ Public Safety
60.0% 0 Public Works
40.0% 0 Parks
20.0% ■ Sanitation
0.0% ■ Other
Actual Actual Actual Actual Actual Budget Budget Expenditures
2001 2002 2003 2004 2005 2006 2007 p
The overall 2007 proposed expenditure budget would increase by $356,158 or 12.2%
over the 2006 budget. The main contributing factors to the budget increase are financing
of capital projects, insurance premium increases, salary increases, salary allocation
changes, fuel /energy cost increases and general inflation.
Page 8
General Fund Expenditure Summary
2006 2007 % Increase
Budget Budget (Decrease)
General Government 998,970 1,065,425 6.7%
Public Safety 1,207,122 1,260,725 4.4%
Public Works 225,375 246,535 9.4%
Parks 127,625 134,745 5.6%
Sanitation 88,500 73,500 (16.9 %)
Other Expenditures 280,180 501000 79.5%
Total Expenditures 2,927,772 3,283,930 12.2%
The chart below shows where the City will make the majority of its expenditures in the
2007 budget year.
2007 Expenditure Distribution
Other Expenditures
15%
General Government ■ General Government
32%
Sanitation 0 Public Safety
2%
■ Public Works
Parks
4% 0 Parks
Public Works ■Sanitation
8%
® Other Expenditures
Public Safety
39%
Page 9
Tax Levies, Tax Capacity and Tax Capacity Rate
Tax Levies
The proposed payable 2007 levy for Oak Park Heights is $2,789,655.
As seen in the chart below, the City had a 24% increase in the tax levy for 2002, 1.3%
increase for 2003, .01 % decrease for 2004, 15.1 % increase for 2005, 14.2% increase for
2006 and a proposed 12.7% increase for 2007.
Tax Levy
3,000,000 - '
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2001 2002 2003 2004 2005 2006 2007
Tax Capacity
The City's estimated 2007 tax capacity value is $7,356,891. This represents a 14.1%
increase in tax capacity value over 2006.
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 6 years.
The current class rates for residential property is I% 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
The chart below shows the change in Tax Capacity Values from 2001 through Proposed
2007. 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.
Page 10
8,000,000
6,000,000
4,000,000
2,000,000
0
2001 2002 2003 2004 2005 2006 2007
ITax Capacity Value 6,795,389 4,773,711 5,569,968 5,622,052 5,964,352 6,448,195 7,356,891
Tax Capacity Rate
The City's Tax Capacity Rate for 2007 is estimated to be 35.731% per $1,000 of tax
capacity value. This represents a decrease of 1.1 % from 2006 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
30
20
10
0
2001 2002 2003 2004 2005 2006 2007
■Tax Rate 23.692 41.741 35.501 34.515 36.488 36.136 35.731
Page I 1
Utility Funds Revenues and Expenditures
The Water Utility Fund revenues are anticipated to increase 11.3% for the year 2007.
The increase in revenue reflects an increase in water rates and an increase in water sales
due to new construction.
Expenditures in the Water Utility Fund are anticipated to increase 36.5% for the year
2007. The increase is due to current and future rehab of the water towers.
The Sewer Utility Fund revenues are anticipated to increase 5.4% for the year 2007. The
increase in revenue reflects an increase in sewer sales due to new construction.
Expenditures in the Sewer Utility Fund are anticipated to increase 5.4% for the year
2007. The increase is due to future rehab of the lift stations and purchase of a generator
for the lift stations.
The Storm Sewer Utility Fund revenues are anticipated to increase 1.3% for the year
2007. The revenue increase is due an increase in interest rates.
Expenditures in the Storm Sewer Utility Fund are anticipated to decrease 39.8% for the
year 2007. The decrease is due completion of the Surface Water Management
Comprehensive Plan.
The Sanitation Fund revenues will decrease 8.3% for the year 2007. The revenue
decrease is due to a decrease in the amount transferred from the General Fund for
residential garbage subsidy. The subsidy has decrease due to a decrease in expenditures.
The garbage amount charged to the residents will not increase.
Expenditures in the Sanitation Fund are anticipated to decrease 5.3% for the year 2007.
The decrease is due to a decrease in costs for the garbage collection.
Utility Funds Revenues Summary
2006 2007 % Increase
Budget Budget (Decrease)
Water Utility Fund $429,588 $478,200 11.3%
Sewer Utility Fund $687,550 $724,500 5.4%
Storm Sewer Utility Fund $76,770 $77,750 1.3%
Sanitation Fund $186,000 $170,650 (8.3 %)
Totals $1,379,908 $1,451,100 5.2%
Page 12
Utility Fund Expenditures Summary
2006 2007 % Increase
Budget Budget (Decrease)
Water Utility Fund $438,625 $598,615 36.5%
Sewer Utility Fund $674,713 $710,920 5.4%
Storm Sewer Utility Fund $85,895 $51,745 (39.8)%
Sanitation Fund $161,300 $152,700 (5.3)%
Totals $1,360,533 $1,513,980 11.3%
Page 13
Debt Service Funds
As of December 31, 2006 the City will have outstanding debt, including interest, in the
amount of $1,027,687. This consists of the G.O. Improvements Bonds of 1998.
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.
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 2007 the City has budgeted transfers in from the General Fund in the amount
of $268,000 and transfers in from the Utility Fund in the amount of $12,400.
The anticipated expenditures for 2007 are for sealcoat /crack seal, outdoor storage, park
and trail improvements, police vehicle, comprehensive plans, tree planting, computers,
police radio equipment and miscellaneous equipment.
Page 15