HomeMy WebLinkAboutTNT-Budget Document i
City of Oak Park Heights
2013 Annual Budget
Pa--e 1
2013 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 g
Utility Fund Revenues and Expenditures 12
Debt Service Funds 13
Budgeted Projects Fund 14
Exhibit A- Summary of Changes to Tax Levy 2013
Page 2
Oak Park Heights City Officials
Position Term Expires
Mayor David Beaudet 12/31/2012
Councilmember Les Abrahamson 12/31/2014
Councilmember Mary McComber 12/31/2012
Councilmember Mike Runk 12/31/2012
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.
• 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, 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.
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, 2012 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. In 2010 the tax
levy consisted of 79.5% of the City's General Fund revenue sources. For the 2013 proposed
tax levy, taxes are 94.1 % of the City's 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.
• In 2010 the City received Utility Valuation Transition Aid of $102,947 from the
state. This revenue has not been received since 2010.
• Interest earnings have decreased
The following chart shows the shift in revenue sources over the past four years.
Actual Actual Budget Budget
2010 2011 2012 2013
Takes -Levy 79.5% 86.6% 92.1% 94.1%
Licenses /Permits 4.7% 3.2% 1.8% 1.0%
Fines and Forfeits 1.4% 1.4% 1.1% 1.0%
Intergovernmental Reven 6.7% 2.4% 1.5% 1.5%
Charges for Services 3.3% 1.9% 0.3% 0.2%
Other Revenue 4.4% 4.5% 3.2% 2.2%
General Fund Revenues
100.00%
90.00
80.00%
- --
70.00% � Other Revenue
-
60.00% v Charges for Services
50.00% N Intergovernmental Revenue
40.00% Fines & Forfeits
30.00% ■ Licenses /Permits
20.00% ■ Taxes
10.00%
0.00% ---
Actual 2010 Actual 2011 Budget 2012 Budget 2013
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 2013, the debt levy of $548,000 was added to General Fund
Levy with a corresponding expenditure of $548,000 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)
2012/2013
2010 2011 2012 2013 Budget
Actual Actual Budget Budget Inc (Dec)
Taxes
Operations $ 3,153,454 $ 3,377,876 $ 3,692,062 $ 3,990,193 298,131
Debt Levy 502,000 524,000 536,000 548,000 12,000
Total Taxes $ 3,655,454 $ 3,901,876 $ 4,228,062 $ 4,538,193 $ 310,131
Other Taxes 29,619 71,646 59,000 65,500 6,500
Business Licenses - Permits 42,039 42,585 36,300 36,105 (195)
Non - Business Licenses - Permit 155,143 88,496 47,100 13,750 (33,350)
Fines & Forfeits 58,335 57,862 50,500 50,500 -
Intergovernmental Revenues 279,412 97,442 70,040 74,040 4,000
Charges for Services 138,173 81,428 13,132 8,680 (4,452)
Miscellaneous Revenues 181,400 186,791 150,550 106,650 (43,900)
Total Revenues $ 4,539,575 $ 4,528,126 $ 4,654,684 $ 4,893,418 $ 238,734
The total 2013 Revenue Budget is $4,893,418. This is an increase of 5.1% or $238,734 over
the 2012 Revenue Budget.
General Fund Expenditures
The Proposed 2013 budget for General Fund Expenditures is $4,893,418. This includes
expenditures for operations and capital projects /outlay. The 2013 operations budget is
$3,566,958 as compared to the 2012 operating budget of $3,407,459, a 4.68% increase.
Transfers for Debt Service and Capital Projects for 2013 are $1,326,460 and $1,257,225 for
2012, or a 5.51 % increase.
The total 2013 Proposed Budget reflects an increase of $228,734. The Operating
Expenditures for 2013 increased $159,499 and the Proposed Budgeted Transfers increased
$69,235.
Page 7
A summary of the General Fund Expenditures by category is a follows:
2010 2011 2012 2013 2012/2013
Actual Actual Budget Budget % Chg
General Government 1,239,057 $ 1,150,892 $ 1,273,824 $ 1,318,812 3.5%
Public Safety 1,307,783 1,325,931 1,473,929 $ 1,567,784 6.4%
Public Works 296,980 250,910 311,435 $ 328,854 5.6%
Parks 144,488 115,775 150,471 $ 153,708 2.2%
Sanitation 190,627 194,610 197,800 $ 197,800 0.0%
General Operations $ 3,178,935 $ 3,038,118 $ 3,407,459 $ 3,566,958 4.7%
Transfers - Capital 604,850 678,240 721,225 $ 778,460 7.9%
Transfers -Debt 122,000 134,000 536,000 $ 548,000 2.2%
Total Transfers 726,850 812,240 1,257,225 1,326,460 5.5%
Total Expenditures $ 3,905,785 $ 3,850,358 $ 4,664,684 $ 4,893,418 4.9%
The General Expenditures are distributed as follows. This is reflective of operations only and
does not include the transfers to other funds.
2010 2011 2012 2013
General Government 39.0% 37.9% 37.4% 37.0%
Public Safety 41.1% 43.6% 43.3% 44.0%
Public Works 9.3% 8.3% 9.1% 9.2%
Parks 4.6% 3.8% 4.4% 4.3%
Sanitation 6.0% 6.4% 5.8% 5.5%
The chart below indicates where the City will incur its expenditures in the 2013 budget year.
2013
Expenditure Distribution
Parks Sanitation
4% 6% ■ General Government
Public Works
9% General M Public Safety
Government
37% Public Works
Parks
■ Sanitation
Page 8
Tax Levies, Tax Capacity and Local Tax Rate
Tax Levies
The proposed payable 2013 general levy for the City of Oak Park Heights that was submitted
to Washington County for the TNT parcel specific notices was $4,538,193. The City included
the total amount for the general obligation debt levies of $548,000 in the general levy instead
of levying the tax under a separate the debt levy. This change was implemented in 2012 as a
planning strategy should levy limits be implemented by the state. Prior to 2012, the City
would levy the debt for the G.O Bonds of 2008 as a separate debt levy from the General Fund
levy (G.O. Bonds of 2009 had always been included in the general levy). The comparison
levy for 2012 and 2013 is as follows:
2012 2013 Inc Dec
General Fund $3,692,062 $3,990,193 $ 298,131
Debt Levy added to Gen Fund 536,000 548,000 $ 12,000
Total General Fund Levy $4,228,062 $4,538,193 $ 310,131
A Summary of the proposed increase of the levy for 2013 is made up of the following
changes:
Increase
Decrease
Debt Service $ 12,000
Revenue Reduction 73,500
Contractual Services 34,620
Personnel Costs 40,100
Added Personnel 90,400
Grants (4,732)
Contingency 2,500
Capital Projects 57,210
General - Materials /Supplies 4,533
Total $ 310,131
More detail of the changes can be obtained from Exhibit A- Summary of Changes to Tax Levy
2013.
Page 9
The following graph shows the total tax levy and its components of debt and operations.
Tax Levy Components
Tax Levy Operations Debt Levy
20
13
20
12
20
11 7" ._
20
10 ` .... .
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000
Tax Capacity
The City's estimated 2013 tax capacity value is $7,904,706. This represents a 1.0% increase
in tax capacity value over the 2012 value of $7,823,155.
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 I% 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 Calculation Market Value After 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 Valuel $ 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
$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 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 decreased by 11.4%
from 2012 to 2013. This decrease results in a lower tax capacity for residential property in
2013 as compared to 2012. Commercial Property values have remained unchanged and the
Public Utility has increased by 10.6%
The chart below shows the change in Total Tax Capacity Values from 2010 through Proposed
2013. 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
2010 2011 2012 2013
Tax Capacity Value 8,080,763 8,309,844 7,823,155 7,904,706
Page 11
Summary of Proposed Tax Levy — local tax rates
Local Tax Rate
The City's Tax Rate for the general levy for 2013 is estimated to be 54.847% per $1,000 of
tax capacity value. This represents an increase of 6.1% from 2012 rates.
Local Tax Rates
60
50
40 _ —
30
20
10
0
2010 2011 2012 2013
■ Tax Rate 43.845 45.028 51.71 54.847
With the proposed General Fund budget of $4,893,418 supported by a tax levy totaling
$4,538,193, residential properties in the City should see a decrease in their city taxes from 6-
8%, even though the tax rate has increased by 6.1 %. The decrease is a result of the reduction
in the market value, therefore decreasing the tax capacity value to which the tax rate is
applied. This 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. 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.
Utility Funds Revenues and Expenditures
The Water Utility Fund revenues are anticipated to decrease by less than I% for 2013.
Expenditures in the Water Utility Fund are anticipated to increase by 1% for the year 2013.
No increase in fees is expected due to a loss recovery of $42,500 being calculated into the
2012 rates. The rates remaining the same should absorb the financial changes in the Water
Fund.
The Sewer Utility Fund revenues are anticipated to increase .7% for the year 2013. The
increase in revenue reflects a 1.5% increase in sewer rates needed to meet projected operation
and capital expenses.
Page 12
Expenditures in the Sewer Utility Fund are anticipated to increase by 6.68% for the year 2013.
This is due mainly to a 9% increase of the charges from Metropolitan Council Environmental
Services.
The Storm Sewer Utility Fund revenues are anticipated to increase 6.09% for the year 2013,
while expenditures are expected to increase 3.25 %. There is no proposed change to rates for
2013.
Utility Funds Revenues Summary
2012 2013 % Increase
Budget Budget (Decrease)
Water Utility Fund $670,908 $665,900 ( .7)%
Sewer Utility Fund $808,300 $814,327 .7%
Storm Sewer Utility Fund $ 78,300 $ 83,070 6.1%
Totals $1,557,508 $1,563,297 .4%
Utility Fund Expenditures Summary
2012 2013 % Increase
Budget Budget Decrease
Water Utility Fund $657,624 $665,900 1.3%
Sewer Utility Fund $763,359 $814,327 6.7%
Storm Sewer Utility Fund $ 64,413 $ 66,506 3.3%
Totals $1,485,396 $1,546,733 4.1%
Debt Service Funds
As of December 31, 2012 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 $8,491,702
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 the City Hall. This bond is scheduled to be repaid by a General Obligation
Debt Levy. The bonds are scheduled to retire in 2028. The city is in the process of selling
Advance Refunding Crossover Bonds to prepay the bonds in 2016. These bonds are
scheduled to be issued in December 2012.
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 13
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 2013 the City has budgeted transfers from the General Fund Budget in the
amount of $361,050 and transfers in from the Utility Fund in the amount of $109,184.
The anticipated expenditures for 2013 are for sealcoat/crack seal, park and trail
improvements and maintenance, tree planting, police vehicle, public works vehicle,
computers and software.
Page 14
EXHIBIT A
CITY OF OAK PARK HEIGHTS
SUMMARY OF CHANGES TO TAX LEVY 2013
PROPOSED TAX LEVY - 2013 $ 4,538,193
TAX LEVY 2012 $ 4,228,062
TOTAL INCREASE IN TAX LEVY $ 310,131
CHANGES
DEBT SERVICE $ 12,000
REVENUES
REDUCTION IN REVENUES
BLDG /VARIOUS PERMITS $ 33,500
INTEREST EARNINGS $ 40,000 $ 73,500
EXPENDITURES
FEE INCREASES
FIRE CONTRACT $ 24,620
INSPECTION SERVICES $ 6,000
ARBORIST INCREAE FOR PROJECTS $ 4,000 $ 34,620
PERSONNEL COSTS
CONTRACTUAL - UNIONS $ 6,100
EDUCATION REIMBURSEMENT $ 14,600
BENEFITS $ 6,800
HEALTH INSURANCE $ 12,600 $ 40,100
ADDED PERSONNEL
POLICE OFFICER - WITH BENEFITS $ 86,800
TEMP PUB WKS $ 3,600 $ 90,400
GENERAL INCREASES - MATERIALS /CONTRACTUAL $ 4,533
GRANTS
LUCY WINTER BELL $ (5,032)
YOUTH SERVICE BUREAU ($10,100 total) $ 300 $ (4,732)
CONTINGENCY
OVERLOOK 75TH ANNIVERSARY $ 2,500
CAPITAL PROJECTS
CAPITAL OUTLAY $ (33,200)
STREET RECONSTRUCTION $ 8,225
STORM SEWER RENEWAL $ 2,185
PARK BUILDING RENEWAL $ 50,000
CITY HALL RENEWAL $ 30,000 $ 57,210
TOTAL CHANGE TO TAX LEVY $ 310,131
SUMMARY - GENERAL FUND CHANGES 11/29/2012 1 of 1