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HomeMy WebLinkAboutTNT Hearing DocumentsOak Park Heights Request for Council Action Meeting Date November 29, 2011 Time Required: 15 minutes Agenda Item Title Proposed 2012 Budget and Tax Levies - Review and Discussion Agenda Placement Old Business Originating Department/ Requestor Finance - Betty Caruso Finance Director Requester's Signature Action Requested Review and public discussion of 2012 budget and tax levies Background /Justification (Please indicate if any previous action has been taken or if other public bodies have advised): See attached - City of Oak Park Heights 2012 Annual Budget information TNT Letter 2012 General Fund Revenue & Expenditure Summary Budget 2012 Tax Impact Worksheet 9/15/11 City of Oak Park Heights Dear City of Oak Park Heights Taxpayer: The purpose of this letter is to provide you a briefing on the City's proposed 2012 Budget and anticipated Tax Levy. The City's 2012 Proposed Tax Levy offers a significant increase in the total amount levied as compared to 2011. This is primarily due to a proposal to levy taxes to offset the water and sanitary sewer user charges. This tax increase would provide funds to the utilities and would result in a decrease in the amount needed from utility billings. While this proposal would raise your property tax, it would reduce all utility users' quarterly utility bills and for most residents will result in an overall savings of 5100 or more . The following is an explanation of the proposed plan. TAX LEVY FOR UTILITY MINIMUM BILLING For 2012, the planned minimum utility bill for water and sewer services is $364.84, ($29.11 /quarter for water and $62.10 /quarter for sanitary sewer). This is the minimum billing for up to 15,000 gallons of usage and is charged to all consumers. A unique proposal in the 2012 Budget is shifting this minimum billing to the tax statement which increases taxes but results in an estimated net savings (combining property taxes and utility bills) as follows: Estimated Increase In No Longer Charged - Market Value of Home Taxes to Cover Utility Shift Minimum Utility Bill Net Savings $100,000 $ 41.92 $364.84 $ 322.92 $150,000 $ 73.76 $364.84 $ 291.08 $250,000 $ 137.45 $364.84 $ 227.39 $300,000 $ 169.29 $364.84 $ 195.55 $450,000 $ 262.90 $364.84 $ 101.94 (Please be aware that this is to shift only the minimum amount of your utility bill. You will continue to be billed for all usage above 15,000 gallons /quarter along with the storm water charge and state water connection charge.) The spreadsheet below outlines the totality of the anticipated changes and the anticipated savings. For example, a homeowner with home value of $150,000 would realize a total savings of $218.69 in 2012 compared to 2011 when property taxes and utility billings are combined. Similarly, a home with a value of $250,000, would realize a total savings of $97.56 per year, compared to 2011. TURN OVER FOR MORE INFORMATION ON BACK RESIDENTIAL MARKET VALUE MARKETVALUES $ 100,000 $ 150,000 $ 250,000 $ 300,000 $ 450,000 2011 SERVICE CHARGES 2011 PROPERTY TAXES $ 337.79 $ 591.21 $ 1,098.07 $ 1,351.00 $ 2,091.10 MINIMUM UTILITY BILLS - 2011 RATES $ 354.92 $ 354.92 $ 354.92 $ 354.92 $ 354.92 TOTAL 2011 $ 692.71 $ 946.13 $ 1,452.99 $ 1,705.92 $ 2,446.02 2012 SERVICE CHARGES 2012 PROPERTY TAXES $ 413.44 $ 727.44 $ 1,355.43 $ 1,669.43 $ 2,592.63 2012 MINIMUM UTILITY BILLING - 2012 RATES $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 TOTAL 2012 $ 413.44 $ 727.44 $ 1,355.43 $ 1,669.43 $ 2,592.63 NE7 SA1/1[ 5 ( .. � � £: � 27 $ .. " 54 .'! 47.56 , COMPONENTS OF 2012 PROPERTY TAXES 2011 PROPERTY TAXES $ 337.79 $ 591.21 $ 1,098.07 $ 1,351.50 $ 2,091.10 2012 CHANGES IN MVHC/TAX VALUATIONS $ 9.54 $ 19.90 $ 40.62 $ 50.98 $ 86.96 2012 INCREASE IN OPERATIONS BUDGET $ 24.19 $ 42.57 $ 79.29 $ 97.66 $ 151.67 2012 INCREASE TAXES FOR UTILITY CHANGE $ 41.92 $ 73.76 $ 137.45 $ 169.29 $ 262.90 TOTAL PROPERTY TAXES $ 413.44 $ 727.44 $ 1,355.43 $ 1,669.43 $ 2,592.63 TURN OVER FOR MORE INFORMATION ON BACK WHILE THIS MINIMUM UTILITY BILLING SHIFT IS UNIQUE THERE ARE TWO ADDITIONAL THINGS OCCURRING IN THE 2012 BUDGET. TAX LEVY FOR OPERATIONS BUDGET The 2012 Operational Expenditure Budget for the City has a proposed increase of 2.7% or $92,000. This increase consists of various additions and deductions as compared to 2011. Changes include $5,000 for Parks Programs, $7,000 for Waste Removal, $8,800 in Street Maintenance /Snow Plowing, $48,000 in Public Safety due to a retirement and replacement hiring of an officer, $8,000 in insurance, and other contractual and supply expenditures. Along with the above increases the City is experiencing a reduction of revenues in the following amounts: a $100,000 decrease in the use of Fund Balance, $65,000 reduction in Administrative Charges and a loss of $30,000 in State and County Revenues /Grants. This results in an increase in the property tax levy of $263,000, or 6 %. For a detailed explanation of the operations budget see the City's website at www.cityofoakparkheights.com MARKET VALUE HOMESTEAD CREDIT VERSUS MARKET VALUE HOMESTEAD EXCLUSION For 2012 the State of Minnesota repealed the Market Value Homestead Credit (MVHC) program and created a new Market Value Exclusion for qualifying homes. These changes are effective for taxes payable in 2012. In place of the MVHC program, homeowners will receive an exclusion of a portion of the market value of their house from property taxes. The exclusion is computed in a manner similar to the market value homestead credit. However, the impact of the change varies from community to community, depending on a number of factors, including tax base of the community and the local tax rate. For the taxpayers of Oak Park Heights this will result in a 3 -4% increase in your property taxes due to the State of Minnesota changing the MVHC program and shifts the State's former tax burden onto the local property tax. SUMMARY The 2012 Proposed Tax Levy is $4,684,562 as compared to $3,964,704 for 2011. This is an increase of $719,858 or 18 %. This increase is a combination of $263,358 for operations and $456,500 for supplementing the utility charges. These proposed levy increases along with the state change in the MVHC to the Market Value Exclusion are the calculations that were utilized in the preparation of the Truth In Taxation Notices. The City is working hard so that most homeowners will see a total cost reduction between their utility bills and their general property taxes when compared with 2011. Final Budgets have not been adopted. The Truth In Taxation Hearing is scheduled for November 29, 2011, 7:00 pm, City Hall, 14168 Oak Park Blvd. N. where the City Council will further discuss the 2012 Budget and its concepts and will take public input. As more information becomes available and the budget process develops between now and December, the City will provide further outreach and information. In the interim, please feel free to call City Finance Director Betty Caruso or City Administrator Eric Johnson @651- 439 -4439 for questions FINAL NOTE: At this time the City has not yet been provided many of the final valuation numbers from Washington County upon which to craft a final budget proposal as this data is not yet available. As in previous years and because of this incomplete data, the City typically sets a HIGH number for its tax levy as it may only be reduced in the final levy which is set in December. 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Levy before reduction for state aids -, $3,964,704 _ ; $4,684,562 o, 18.2% 2. State Aids $0 $0 0.0% 3. Certified Property Tax Levy $3,964,704 $4,684,562 18.2% 4. Fiscal Disparity Portion of Levy $222,950 $182,726 -18.0% 5. Local Portion of Levy $3,741,754 $4,501,836 20.3% 6 Local Taxable Value $8,309,844 $7,813,846 6.0% 7 Local Tax Rate 45.028%1 57.614%1 28.0% Step 2 - Calculate the Impact of the Taxing District's Rate on Residential Homestead Taxes: 8. Assumes a -3.1% change in market value from 2011 to 2012, which is the city median change 9. 10. 11. 12. 13. 14. 18. 19. 20. 21. 22. 23. 27. 28. 29. 30. 31. _. aY x + X 0.969 rem @ .09% (B12 x D) rem @ 1.25% (G) �uu,vvv (y t.v7o rem @ 1.25% (A/ x C�) /b,000 @ .40% rem @.09% u 1 rem @.09% Estimated Tax District rate as % of total rate: 45% 58% 103,200 NA 103,200 1,032 464.69 $ 279.52 $126.90 $337.79 154,800 NA 154,800 1,548 697.03 $ 233.08 $105.82 $591.21 258,000 NA 258,000 2,580 1,161.72 $ 140.20 $63.65 $1,098.07 309,600 NA 309,600 3,096 1,394.07 $ 93.76 $42.57 $1,351.50 464,400 NA 1 464,4001 4,6441 2,091.10 1 $0.001 $2,091.10 _. aY x + X 0.969 rem @ .09% (B12 x D) rem @ 1.25% (G) x `Gk - 11.0% (F) -(H) 22.4% Estimated Tax District rate as % of total rate: -18.4% 58% 4.4% 100,001 28,240 71,761 718 413.44 NA NA $413.44 150,001 23,740 126,261 1,263 -6.4% 727.44 NA NA $727.44 250,002 14,740 235,262 2,353 -3.1% 1,355.43 NA NA $1,355.43 300,002 10,240 289,763 2,898 1,669.43 NA NA $1,669.43 450,004 1 450,004 1 4,500 2,592.63 NA NA $2,592.63 m' w 3.1% 30.5% -30.5% `Gk - 11.0% 22.4% 3.1% -18.4% -18.4% 4.4% 23.0% 3.1% -8.8% -8.8% 16.7% 23.4% -3.1% -6.4% -6.4% 19.8% 23.5% -3.1% -3.1% -3.1% 24.0% 24.0% $ Inc $75.65 $136.22 $257.36 $317.93 $501.53 Proposed Pay 2012 Property Tax Impact Worksheet Taxing District: 1700 Oak Park Heights - GENERAL LEVY & DEBT LEVY Step 1- Calculate the Taxing District's Tax Rate - Total General and Debt Levy PRELIM BGT -No Utility Chg 1. Levy before reduction for state aids $3,964,704 $4,228,062 6.6% 2. State Aids $0 $0 0.0% 3. Certified Property Tax Levy $3,964,704 $4,228,062 6.6% 4. Fiscal Disparity Portion of Levy $222,950 $182,726 -18.0% 5. Local Portion of Levy $3,741,754 $4,045,336 8.1% 6 Local Taxable Value $8,309,8441 $7,813,846 Y. 7 Local Tax Rate 45.028% 51.771% 15.0% Step 2 - Calculate the Impact of the Taxing District's Rate on Residential Homestead Taxes: 8. Assumes a -3.1% change in market value from 2011 to 2012, which is the city median change 9. 10. 11. 12. 13. 14. 18. 19. 20. 21. 22. 23. 27. 28. 29. 30. 31. N „ If ay X 0.969 . N +j !y, G l h �. 5 (G) x % (F) - (H) Estimated Tax District rate as % of total rate: -18.4% 52% -6.2% 100,001 28,240 71,761 718 371.52 NA NA $371.52 buu,uuu Cap 1.0% 23,740 A7 x 1,263 -6.4% 653.67 NA ° $653.67 250,002 14,740 rem @ 1.25° 2,353 -3.1% rem @ .09% NA NA rem @.09% 300,002 10,240 Estimated Tax District rate as % of total rate: 1,500.14 NA NA 45% 450,004 103,200 450,004 NA 103,200 1,032 NA I 464.69 $ 279.52 $126.90 $337.79 154,800 NA 154,800 1,548 697.03 $ 233.08 $105.82 $591.21 258,000 NA 258,000 2,580 1,161.72 $ 140.20 $63.65 $1,098.07 309,600 NA 309,600 3,096 1,394.07 $ 93.76 $42.57 $1,351.50 464,400 NA 464,400 4,644 2,091.10 $0.00 L $2,091.10 N „ If ay X 0.969 y tt �' Mah' ? ,1' ✓bN ]t .�` x �. +- rem Ca .09% (612 x D) rem @ 1.25% +j !y, G l h �. 5 (G) x % (F) - (H) Estimated Tax District rate as % of total rate: -18.4% 52% -6.2% 100,001 28,240 71,761 718 371.52 NA NA $371.52 150,001 23,740 126,261 1,263 -6.4% 653.67 NA NA $653.67 250,002 14,740 235,262 2,353 -3.1% 1,217.98 NA NA $1,217.98 300,002 10,240 289,763 2,898 1,500.14 NA NA $1,500.14 450,004 450,004 4,500 2,329.731 NA NA I $2,329.73 3.1% -30.5% CIS.._ -30.5% - 20.1% i,i 10.0% -3.1% -18.4% -18.4% -6.2% 10.6% -3.1% -8.8% -8.8% 4.8% 10.9% -3.1% -6.4% -6.4% 7.6% 11.0% -3.1% -3.1% -3.1% 11.4% 11.4% $ Inc $33.73 $62.46 $119.91 $148.64 $238.63 Proposed Pay 2012 Property Tax Impact Worksheet Taxing District: 1700 Oak Park Heights - GENERAL LEVY & DEBT LEVY Step 1- Calculate the Taxing District's Tax Rate - Total General and Debt Levy Base - No change to 2011 9. 10. 11. 12. 13. 14. 18. 19. 20. 21. 22. 23. 27. 28. 29. 30. 31. Pay` X 0.969 rem @.09% �uu,vuv & L.V %o rem @ 1.25% JA/ X aJ /b,000 (u .40% rem @ .09% �- .�� (F) (H) 76 rem @.09% Estimated Tax District rate as % of total rate: 45% 103,200 NA 103,200 1,032 464.69 $ 279.52 $126.90 $337.79 154,800 NA 154,800 1,548 697.03 $ 233.08 $105.82 $591.21 258,000 NA 258,000 2,580 1,161.72 $ 140.20 $63.65 $1,098.07 309,600 NA 309,600 3,096 1,394.07 $ 93.76 $42.57 $1,351.50 464,400 NA 464,400 4,644 2,091.101 1 $0.001 $2,091.10 Pay` X 0.969 rem @.09% 3 x + (1312 x D) rem @ 1.25% �. ,.� -30.5% (G) x % �- .�� (F) (H) Estimated Tax District rate as % of total rate: -18.4% 48 -12.3% 100,001 28,240 3.4% 71,761 718 -8.8% 347.33 NA NA $347.33 150,001 23,740 126,261 1,263 0.6% 611.12 NA NA $611.12 250,002 14,740 -3.1% 235,262 2,353 1,138.69 NA NA $1,138.69 300,002 10,240 289,763 2,898 1,402.48 NA NA $1,402.48 450,004 450,004 4,500 2,178.06 NA NA $2,178.06 -3.1% ry try � «en �. ,.� -30.5% - e -30.5% 203 © 203.. - 25.3% 2.8% 3.1% -18.4% -18.4% -12.3% 3.4% -3.1% -8.8% -8.8% -2.0% 3.7% -3.1% -6.4% -6.4% 0.6% 3.8% -3.1% -3.1% -3.1% 4.2% 4.2% $ Inc $9.54 $19.90 $40.62 $50.98 $86.96 Step 2 - Calculate the Impact of the Taxing District's Rate on Residential Homestead Taxes: 8. Assumes a -3.1% change in market value from 2011 to 2012, which is the city median change City of Oak Park Heights 2012 Annual Budget Page 1 2012 Annual Budget Table of Contents City Officials 3 Budget Process 4 General Fund Revenues 6 General Fund Expenditures g Tax Levies, Tax Capacity and Tax Capacity Rate 10 Utility Fund Revenues and Expenditures 13 Debt Service Funds 14 Budgeted Projects Fund 15 Page 2 Oak Park Heights City Officials Position Mayor David Beaudet Councilmember Les Abrahamson Councilmember Mary McComber Councilmember Mike Runk Councilmember Mark Swenson 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 Term Expires 12/31/2012 12/31/2014 12/31/2012 12/31/2012 12/31/2014 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 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, 2011 and to the Minnesota Department of Revenue after the levy is adopted. Page 5 General Fund Revenues The City Council and the residents of Oak Park Heights are aware of the trend towards relying more on the tax levy for the City's source of revenue. In 2009 the fax levy consisted of 81.7% of the City's revenue source. For the 2012 proposed tax levy, taxes are 91.4% of the City's projected revenue. There are several factors that contribute to this change: Licenses and Permits have decreased; The City has reduced the utility fund administration fee from 7% to 0% of the current utility expenditures as a change in policy which no longer charges this fee to the Water and Sewer Funds.; The State has limited the ability of Cities to increase fees for certain services, i.e. various liquor license fees, sale of fireworks fees, and permit fees for minor improvements; In 2009 and 2010 the City received Utility Valuation Transition Aid from the State of $178,390 and $102,947 respectively. This revenue was not collected in 2011 and not budgeted for in 2012. The Other Revenue category for 2010 and 2011 reflects the use of $193,635 and $100,000 of December 31, 2009 /2010 undesignated fund balance. This is allocated to offset the amount needed to balance to the 2010 and 2011 expenditure budget. The 2012 Budget does not propose to use unrestricted fund balance to balance or supplement the current year's expenditures budget. The following charts show the shift in revenue sources over the past few years. Page 6 Actual Actual Budget Budget 2009 2010 2011 2012" Taxes 81.7% 81.3% Licenses /Permits 2.6% 2.0% Fines and Forfeits 1.8% 1.7% Intergovernmental Reven 7.1% 4.5% Charges for Services 1.8% 1.8% Other Revenue 5.0% 8.7% 1 Budget adjusted for changes in policy regarding utilities and debt levy. 86.4% 2.1% 1.5% 2.2% 1.8% 6.0% 91.4% 2.0% 1.2% 1.6% 0.3% 3.5% Page 6 General Fund Revenues 100.00% 90.00% 80.00% 70.00% ■ Taxes 60.00% ■ Licenses /Permits 50.00% ■ Fines & Forfeits 40.00 ■ Intergovernmental 30.00% Revenue -° ■ Charges for Services 20.00 10.00% ■ Other Revenue 0.00% Actual 2009 Actual 2010 Budget 2011 Budget 2012 Page 6 The proposed 2012 budget includes additional revenue amounts for the proposed changes to the General Fund tax levy for transfers to the Water and Sewer Funds and the inclusion of the debt levy for the G. O. Capital Improvement Bonds of 2008. The transfer to the Water and Sewer Funds is to offset the water and sanitary sewer user charges. The debt levy was included in the total tax levy in prior years but was not budgeted for in the General Fund. For 2012, the debt levy of $400,000 was added to General Fund Levy with a corresponding expenditure of $400,000 transfer to the debt service fund. The actual and budgeted amounts for 2010 and 2011 are adjusted to show this change in policy and to reflect a more comparable budget for analysis. General Fund Revenue Summary (Adjusted for 2012 Changes in Budgeting Policy) Taxes Operations $ Debt Levy Debt Levy - Debt Fund Water /Sewer User Charge Offset Total Taxes $ Other Taxes Business Licenses- Permits Non - Business Licenses - Permits Fines & Forfeits Intergovernmental Revenues Charges for Services Miscellaneous Revenues Undesignated Fund Balance 2011/2012 2010 2011 2012 Budget Actual Budget Budget Inc (Dec) 3,252,704 $ 3,440,704 $ 3,692,062 $ 251,358 122,000 134,000 536,000 402,000 380,000 390,000 (390,000) - - 456,500 456,500 3,754,704 $ 3,964,704 $ 4,684,562 V $ 719,858 29,550 49,000 59,000 10,000 31,650 33,800 36,300 2,500 50,000 53,500 47,100 (6,400) 67,700 60,500 50,500 (10,000) 185,987 88,040 70,040 (18,000) 72,420 73,425 13,132 (60,293) 162,580 145,500 150,550 5,050 193,635 100,000 - (1 00.000 ) Total Revenues $ 4,548,226 $ 4,568,469 $ 5,111,184 $ 542,715 The total 2012 Revenue Budget is $5,111,184. This is an increase of 11.9% or $542,715 over the 2011 revenue budget. $456,500 , which is accountable for 10 % of the 11.9% increase, is due to the proposed change to increase the tax levy for the offset of the minimum water and sewer utility billing Page 7 The chart below shows the anticipated revenues for the budget year 2011. 2012 Revenue Distribution • Operating Taxes erTaxes ■ Debt Taxes 1% • Water /Swr Offset • Other Taxes • Other Business Licenses - Permits • Other Non- Business Licenses - Permits • Other Fines & Forfeits • Other Intergovernmental Revenues General Fund Expenditures The Proposed 2012 budget for expenditures is $5,111,184. This amount includes transfers to other funds of $1,713,725. The operations budget net of these transfers is $3,397,459 as I ompared to the 2011 operating budget of $3,305,477, or a 2.8% increase. 2011 2012 % Increase Budget Budget (Decrease) General Government $ 1,222,190 $ 1,273,824 4.2% Public Safety 1,422,750 1,463,929 2.9% Public Works 304,805 311,435 2.2% Parks 164,932 150,471 -8.8% Sanitation 190,800 197,800 3.7% General Operations 3,305,477 3,397,459 2.8% Transfers 780,740 1,713,725 119.5% Total Expenditures $ 4,086,217 $ 5,111,184 25.1% Page 8 The General Expenditures are distributed as follows. This is reflective of operations only and does not include the transfers to other funds. The chart below reflects where the City will incur its expenditures in the 2012 budget year. Actual Budget Budget Expenditure Distribution 2010 2011 2012 General Government 39.0% 37.0% 37.5% Public Safety 41.1% 43.0% 43.1% Public Works 9.3% 9.2% 9.2% Parks 4.6% 5.0% 4.4% Sanitation 6.0% 5.8% 5.8% The chart below reflects where the City will incur its expenditures in the 2012 budget year. Page 9 2012 Expenditure Distribution Sanitation 5.8 Parks General 4.4% Government ■ General 37.5% Government Public Works ■ Public Safety 9.2% ■ Public Works ■ Parks ■ Sanitation Page 9 The total 2012 Proposed Budget reflects an increase of $1,024,967. The Operating Expenditures for 2012 increased $91,982 and the Proposed Budgeted Transfers increased $932,985. The Transfer increase includes the amount of the tax levy that is directly related to the increase in the debt levy and the proposed change to offset the minimum water and sewer bill. The summary of the transfers as compared to 2011 are as follows: Tax Levies, Tax Capacity and Local Tax Rate Tax Levies The proposed payable 2012 general levy for the City of Oak Park Heights that was submitted to Washington County for the TNT parcel specific notices was $4,684,562. The City included the amount for the general obligation debt levies of $536,000 which is a change from prior years in which the City would levy the debt portion as a separate levy from the General Fund levy. The comparison levy for 2011 and 2012 is as follows: General Fund Debt Levy added to Gen Fund Total General Fund Levy Deb Levy Total Tax Levy 2011 2011 2012 $3,440,704 $4,148,562 Budget Bu_ dget Increase Transfer to Budgeted Projects Fund $ 248,740 $ 314,225 $ 65,485 Transfer to Debt Funds 134,000 536,000 $ 402,000 Transfer to Water Fund - Min Bill - 149,000 $ 149,000 Transfer to Sewer Fund - Min Bill - 307,500 $ 307,500 Capital Projects - Long Term $ - Transfer to Street Reconstruction Fund 320,000 329,000 $ 9,000 Transfer to Storm Sewer Renewal Fund 78,000 78,000 $ - Total Transfers $ 780,740 $ 1,713,725 $ 932,985 Tax Levies, Tax Capacity and Local Tax Rate Tax Levies The proposed payable 2012 general levy for the City of Oak Park Heights that was submitted to Washington County for the TNT parcel specific notices was $4,684,562. The City included the amount for the general obligation debt levies of $536,000 which is a change from prior years in which the City would levy the debt portion as a separate levy from the General Fund levy. The comparison levy for 2011 and 2012 is as follows: General Fund Debt Levy added to Gen Fund Total General Fund Levy Deb Levy Total Tax Levy 2011 2012 Inc Dec $3,440,704 $4,148,562 $ 707,858 134,000 536,000 $ 402,000 $3,574,704 $4,684,562 $1,109,858 390,000 -0- ($390,000 $3,964,704 $4,684,562 $719,858 A Summary of the Proposed increase for 2012 is made up of the following changes: Debt Service $ 12,000 Transfer for Min Water Bill $ 149,000 Transfer for Min Sewer Bill $ 307,500 Inc. Trans for Capital Projects $ 74,500 Adm Fees - Not Charged $ 69,500 Fund Balance Not Applied To Budget $ 100,000 Reduction in Revenues $ 6,500 Increase in Expenditures $ 92,000 Market Value Homestead Credit- not received $ 92,000 Total $ 719,000 Page 10 Tax Levy Components 2012 2011 2010 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 Tax Capacity The City's estimated 2012 tax capacity value is $7,813,846. This represents a 6.0% decrease in tax capacity value over the 2011 value of $8,309,844. Tax capacity value is market value of the property 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 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 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 will 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: $304 - (EMV- $76,000)X .0009; Maximum EMV $413,800) The impact of this change will vary in each community. For the qualifying taxpayers in Oak Park Heights, this has increased your taxes by 34%. It reduces the total tax capacity of the city, reducing the total that is available to allocate taxes upon, therefore increasing individual tax bills. The median market value from 2011 to 2012 for the City is estimated to decrease 3.1 %. Page 11 Wax Levy Operations ■Debt Levy aaUtility Levy The chart below shows the change in Tax Capacity Values from 2010 through Proposed 2012 Summary of Proposed Tax Levy — local tax rates Local Tax Rate The City's Tax Rate for the general levy for 2012 is estimated to be 57.614% per $1,000 of tax capacity value. This represents an increase of 28.0% from 2011 rates. The portion of the local tax rate that is related to the proposed change in shifting the minimum water and sewer utility bill to the tax roll is 5.843 %. The proposed tax rate for the tax levy excluding the amount for the water and sewer utility shift is 51.771 % Page 12 Local Tax Rates 60 50 40 30 20 10 0 2011 2012 • Tax Rate - Utility Portion 5.843 • Inc Operations Budget 2.454 • Change in MVHC 4.289 • BaseTax Rate 45.028 45.028 Page 12 Utility Funds Revenues and Expenditures The Water Utility Fund revenues are anticipated to increase 1.3 1 % for the year 2012. The increase in revenue reflects an increase in water rates of 2.8% which is needed to meet projected operation and capital expenses. Expenditures in the Water Utility Fund are anticipated to decrease 3.37% for the year 2012. The decrease is due to reduced costs compared to 2011 which included expenses for the Well Head Protection Study and a reduction in capital costs for 2012. The Sewer Utility Fund revenues are anticipated to increase .7% for the year 2012. The increase in revenue reflects a 2.8% increase in sewer rates needed to meet projected operation and capital expenses. Expenditures in the Sewer Utility Fund are anticipated to decrease 4.9% for the year 2012. This decrease is due to a 9% reduction of the charges from Metropolitan Council Environmental Services. The Storm Sewer Utility Fund revenues are anticipated to increase .45% for the year 2012. There is no proposed change to rates for 2012. Expenditures in the Storm Sewer Utility Fund are anticipated to decrease by 3.84% for the year 2012. This decrease is due to reduced capital costs. Utility Funds Revenues Summary Water Utility Fund Sewer Utility Fund Storm Sewer Utility Fund Totals 2011 Budget $606,435 $802,705 $ 77,950 $1,487,090 2012 Budget $672,625 $808,316 $ 78,300 $1,559,241 % Increase Decrease 10.9% .7% .5% 4.9% Water Utility Fund Sewer Utility Fund Storm Sewer Utility Fund Totals Utility Fund Expenditures Summary 2011 Budget $606,435 $802,705 66,985 $1,476,125 2012 Budget $600,494 $763,359 $ 64,413 $1,428,266 % Increase Decrease ( 1.0%) ( 4.9%) ( 3.8%) (3.2%) Page 13 Debt Service Funds As of December 31, 2011 the City will have outstanding debt, including interest, in the amount of $9,631,732 for the following bond issues: G.O. Capital Improvement Bonds of 2008 $8,849,702 G.O. Capital Improvement Bonds of 2009 $1,140,030 The G.O. Capital Improvement Bonds of 2008 were issued in 2008 to provide financing for the construction of a new City Hall. This bond is scheduled to be repaid by a General Obligation Debt Levy. The bonds are scheduled to retire in 2028. The G.O. Capital Improvement Bonds of 2009 were issued in 2009 to provide additional financing for the construction of a new 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 2012 the City has budgeted transfers from the General Fund Budget in the amount of $314,225 and transfers in from the Utility Fund in the amount of $108,689. The anticipated expenditures for 2012 are for sealcoat/crack seal, park and trail improvements and maintenance, tree planting, police vehicle, civil defense siren, copier, computers and software. Page 15