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Home My WebLink About9.c. 2016 Budget EXECUTIVE SUMMARY City Council Regular Meeting September 15, 2015 AGENDA ITEM: 2016 Budget AGENDA SECTION: New Business PREPARED BY: Dwight Johnson, City Administrator Jeff May, Finance Director AGENDA NO. 9.c. ATTACHMENTS: Resolution, 2016 Preliminary Budget Summary APPROVED BY: ddj RECOMMENDED ACTION: Adopt a Resolution Setting the Preliminary 2016 General Fund Operating Budget, the Preliminary 2016 C.I.P. Budgets, the Preliminary 2016 Insurance Budget, the Preliminary 2016 Port Authority Operating Levy and the Preliminary 2015 Levy and Budget Hearing Date of December 1, 2015 at 7:00 p.m. at City Hall. EXECUTIVE SUMMARY The recommended budget for 2016 proposes an increase in the City’s property tax levy of 1.95%. This would result in an estimated annual increase of $34 in the City taxes assessed to a median value home. The estimated City tax on a median family home valued at $238,250 would be $958. A 7.39% increase in the median residential property value combined with the increased levy amount is responsible for the projected increase in 2016. Even with this increase, the City has reduced taxes on the median home by $100 since 2008. The proposed increase in levy approximates the growth rate in the community. The budget shows some increased costs for operating new facilities, additional funding for the Equipment CIP fund based on longer range projections, a new mid-year human resources employee, additional part- time building inspection positions, changing paid on call firefighters pay to an hourly basis instead of a per call basis, and overall increased wages and benefits for 2016. Partially offsetting these increased costs are increased development related fees for building permits, plan checks and administrative charges for development of new streets and utilities. Another major reduction is a reduced levy requirement for the Fire Pension fund since it is now fully funded. A public hearing on the budget will be scheduled for December 1st at 7:00 p.m. in the City Hall Council Chambers. A summary of key characteristics of the proposed 2016 budget is shown in the following table: Budget Facts at a Glance Increase of property tax base from 2015 +6.84% Average increase in median value residential property +7.39% General fund spending change: +2.89% Total funding change – all tax impacted funds +$377,355 Change in overall tax levy from 2009 -$388,162 City share of tax impact on median value home +$34 Percentage tax change on median value home +3.68% Change in estimated tax rate (City share only) -4.62 (from .45152 to .43065) 2 BUDGET PROCESS The annual budget process begins with the discussion of goals and work plans by the City Council early in the year. This draft budget was initially developed by the Department Directors. We met with each Department Director and reviewed details of their budget with them. In addition, as a part of the budget review, we have looked again at 10 year needs projections for street improvements, equipment replacement, buildings and the Ice Arena. We have also reviewed our long term needs for major maintenance needs for parking lots, playgrounds, etc. The budget was also recast in a program budget format in May of this year to help show spending by program or activity throughout the City. Performance measurements and additional long range revenue and expenditure projections were added. Finally, we looked at the overall budget strategically one more time for its overall balance, consistency, impact on taxpayers, and long term impacts on finances for 2016 and beyond. Our hope was to develop the most conservative budget possible that: (1) is consistent with council goals (2) is consistent with previous council direction on levels of service, (3) does not weaken the City’s long range financial outlook. (4) is balanced not only between revenues and expenditures, but also is well balanced internally between personnel, equipment, technology, operating needs and capital expenditures. According to state law, the preliminary budget and levy must be adopted by September 30th and the final budget must be adopted by December 29th after a public hearing. GENERAL FACTORS AFFECTING THE BUDGET Tax Base For the third consecutive year, the overall tax base in the community has increased. The overall tax capacity value within the City is estimated to be 6.84% higher in 2016 than it was in 2015. The increase in market value of the median home in Rosemount is 7.39%. State Budget and Legislative Impacts There were no significant changes in State legislation for 2016. There are no levy limits for 2016. REVENUES Property taxes fund 77% of the General Fund budget. However, there are several other categories of General Fund revenues that are also important to the City. The chart below compares budgeted revenue for 2015 with estimated revenue in 2016 for several key categories of revenues. 3 2015 Budget 2016 Estimated Change Licenses & Permits 535,800 611,800 +76,000 Intergovernmental 670,200 679,400 +9,200 Charges for Services (no SKB) 375,800 458,800 +83,000 Fines & Forfeits 125,000 120,000 -5,000 Recreational Revenues 248,000 226,800 -21,200 Miscellaneous Revenues 112,700 136,500 +23,800 SKB revenue (General Fund portion) 525,000 525,000 -0- Building permit revenues have varied from about $300,000 to $500,000 annually over the past three years and have been showing an upward trend. For 2016, we are estimating an amount of $425,000. Charges for Services includes an additional $50,000 in plan check fees which are related to building permits. EXPENDITURES Salaries Rosemount currently has 80 authorized full time employees. This compares with 81 full time employees at the beginning of 2008. One new full-time employee is proposed for 2016 to assist with human resources functions, with the majority of funding coming from existing part-time salary budgets. The new position will help free higher level staff from excessive support and technical functions. Additional part-time employment is provided in the Community Development Department budget in case building inspection workloads continue to increase. All four bargaining unit contracts expire at the end of 2015. Estimated wage increases are included in the 2016 budget for the employees covered by bargaining units as well as general employees but the actual costs will not be known for several months. Health Insurance Our health insurance quote for 2016 increased by 14.9%. Staff has sought additional bids. If the increase stands, staff proposes to use a reserve established several years ago that allows us to budget according to the three year average of health insurance premium increases rather than be subject to extreme year to year variations (last year we had a decrease of 2.5%). Operation and Maintenance One factor in developing the 2016 budget is providing for a full-year of operation of the Steeple Center ($33,900). Also the budget for the Cable Commission is increasing by $23,600 primarily for replacement equipment. Capital Budgets The City currently has three capital improvement program (CIP) funds: Equipment, Streets, and Buildings. Staff has not yet done a detailed review of the CIP and plans to bring a proposed 10 year CIP to the Council later this year. A general review of the trends for the purpose of setting CIP levies for 2016 has been done. The levy for the Equipment CIP is proposed to be $560,000, an increase of $20,000 due to future forecasted needs. This fund will also be a priority for any general fund surplus money at the end of 2015. The Street CIP is proposed to have a levy of $780,000 for 2016, an increase of $20,000 to reflect the growth rate of the City and inflation. 4 The Building CIP has an ongoing levy of $24,000 for 2016 which is for the repayment of an internal loan for the current Public Works facility. The Building CIP fund is paying for the City’s share of the Steeple Center redevelopment project and may also provide some funds for partnerships to develop indoor recreational facilities. It will also fund some improvements and updates planned for the Community Center as well as certain park projects. No tax levy above the current $24,000 is proposed. New SKB host agreement funds along with proceeds from past General Fund surpluses and proceeds from the former SKB Trust fund will provide the funds for these projects. Enterprise Fund Budgets The City’s Enterprise Funds include the Water Fund, Sewer Fund and Stormwater Fund. The proposed water rate increase is 4% in order to continue building up funds for planned wells and storage facilities as well as a potential water treatment plant. The proposed sewer rate increase is also 4% due to a major increase in the cost of sewage treatment from the Met Council. CONCLUSION The City has reduced the tax burden on the median value home in recent years and proposes a modest increase of 1.95% this year. Additional development related fees and a lower levy for the fire pension help offset increased personnel and benefit costs so that Rosemount will once again have the lowest municipal levy increase in the County in 2016 while still maintaining our service levels and our long-range equipment and facilities replacement schedules. Even with the proposed 1.95% increase for 2016, the overall City levy will still be $388,162 lower than it was in 2009 and the median home taxes about $100 less per year than in 2009. FUNDING REQUIREMENTS - USES (INCLUDING FIRE STATION LEVY) September 15, 2015 2015 2016 Adopted Proposed +/- Departments Budget Budget Difference Percentage ----------------------------------------------------------------------------------------------------------------------------------- Council Budget $265,900 $283,800 $17,900 6.73% Sales Tax Exemption Savings ($90,000)($60,000)$30,000 n/a Administration Budget 520,300 605,600 85,300 16.39% Elections Budget 20,000 48,200 28,200 141.00% Finance Budget 496,100 504,100 8,000 1.61% General Government Budget 351,100 326,800 (24,300)-6.92% Community Development Budget 943,900 989,800 45,900 4.86% Police Budget 3,546,200 3,665,500 119,300 3.36% Fire Budget 409,300 366,400 (42,900)-10.48% Public Works Operating Budgets: Government Buildings Budget 520,100 541,600 21,500 4.13% Fleet Maintenance Budget 692,800 681,300 (11,500)-1.66% Street Maintenance Budget 1,332,100 1,349,400 17,300 1.30% Parks Maintenance Budget 912,400 905,300 (7,100)-0.78% Park & Rec Budget - General Operating 1,175,700 1,237,800 62,100 5.28% Park & Rec Budget - Steeple Ctr. Operations 59,500 93,400 33,900 56.97% Park & Rec Budget - Activity Center 32,700 0 (32,700)-100.00% Park & Rec Budget - Special Programs 105,400 84,400 (21,000)-19.92% Transfers - Arena Assistance 130,000 130,000 0 0.00% ----------------------------------------------------------------------- Total Operating Budgets - General Fund $11,423,500 $11,753,400 $329,900 2.89% Building CIP Requirements 24,000 24,000 0 0.00% Street CIP Requirements 760,000 780,000 20,000 2.63% Equipment CIP Requirements 540,000 560,000 20,000 3.70% Insurance Budget Requirements 245,000 245,000 0 0.00% Port Authority Operating Levy 58,000 58,000 0 0.00% Bonded Indebtedness 373,247 380,702 7,455 2.00% Water Enterprise Fund 1,686,300 1,579,300 (107,000)-6.35% Sewer Enterprise Fund 1,883,800 2,060,197 176,397 9.36% Storm Water Enterprise Fund 663,900 743,700 79,800 12.02% Arena Enterprise Fund 579,800 592,600 12,800 2.21% ----------------------------------------------------------------------- Total Funding Requirements $18,237,547 $18,776,899 $539,352 2.96% ======================================= NOTE: Special Levies include (1)Bonded Indebtedness, (2)Fire Station Levy and (3)Armory Anticipatory Levies. FUNDING REQUIREMENTS - SOURCES (INCLUDING FIRE STATION LEVY) September 15, 2015 2015 2016 Adopted Proposed +/- Types Budget Budget Difference Percentage ----------------------------------------------------------------------------------------------------------------------------------- Internal Revenue Generated: Licenses and Permits 535,800 611,800 76,000 14.18% Intergovernmental 670,200 679,400 9,200 1.37% Charges for Services 900,800 983,800 83,000 9.21% Fines & Forfeits 125,000 120,000 (5,000)-4.00% Recreational Fees 248,000 226,800 (21,200)-8.55% Miscellaneous Revenues 112,700 136,500 23,800 21.12% Transfers In 3,500 3,500 0 0.00% Enterprise Revenues 4,813,800 4,975,797 161,997 3.37% ------------------------------------------------------------------------ Total Internal Revenues 7,409,800 7,737,597 327,797 4.42% Levy Sources: Special Levies 373,247 380,702 7,455 2.00% General Levy 10,454,500 10,658,600 204,100 1.95% ------------------------------------------------------------------------ Total Levy $10,827,747 $11,039,302 $211,555 1.95% ------------------------------------------------------------------------ Total Revenue Sources $18,237,547 $18,776,899 $539,352 2.96% ====================================== NOTE: Special Levies include (1)Bonded Indebtedness, (2)Fire Station Levy and (3)Armory Anticipatory Levies. CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2015 - A RESOLUTION SETTING THE PRELIMINARY 2016 GENERAL FUND OPERATING BUDGET, THE PRELIMINARY 2016 C.I.P. BUDGETS, THE PRELIMINARY 2016 INSURANCE BUDGET, THE PRELIMINARY 2016 PORT AUTHORITY OPERATING LEVY AND THE PRELIMINARY 2015 LEVY AND BUDGET HEARING DATE REQUIRED BY THE CITY OF ROSEMOUNT WHEREAS, the City Council of the City of Rosemount has determined that budgets and special needs for the year 2016 will be in the amount of $18,396,197 for the General Operating Fund, the three CIP Funds, the Insurance Fund, the Port Authority Fund and the Enterprise Funds; and WHEREAS, the City Council has determined that special levies for Bonded Indebtedness and the Armory Project total $380,702; and WHEREAS, the City Council has determined that actual incomes, fund transfers and anticipated aids will total $7,737,597. NOW, THEREFORE BE IT RESOLVED, that the total Preliminary Levy certified to the Dakota County Auditor shall be $11,039,302; and BE IT FURTHER RESOLVED, that the City Council of the City of Rosemount will conduct a Public Hearing for the purpose of presenting the proposed budget and levy to the general public and to comply with Truth in Taxation laws as set by the Minnesota State Legislature, and that the hearing shall take place on Tuesday, December 1, 2015, at 7:00 P.M., in the Council Chambers at the City Hall. ADOPTED this 15th day of September, 2015. _____________________________ William H. Droste, Mayor ATTEST: __________________________ Clarissa Hadler, City Clerk RESOLUTION 2015 - CERTIFICATION I hereby certify that the foregoing is a true and correct copy of a resolution presented to and adopted by the City Council of Rosemount at a duly authorized meeting thereof, held on the 15th day of September, 2015, as disclosed by the records of said City in my possession. (SEAL) _______________________________ Clarissa Hadler, Rosemount City Clerk