HomeMy WebLinkAbout2.d. 2006 Budget - Preliminary LevyAGENDA ITEM: 2006 Budget Preliminary Levy
AGENDA SECTION:
Discussion
PREPARED BY: Jamie Verbrugge, City Administrator
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ATTACHMENTS: Update Budget Page, Residential Lot
Inventory
APPROVED BY:
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RECOMMENDED ACTION: Give staff direction
4 ROSEMOUNT
CITY COUNCIL
City Council Work Session August 10, 2005
EXECUTIVE SUMMARY
BACKGROUND
The City Council discussed the 2006 Budget and preliminary levy at a special work session on July 28,
2005. The purpose of this meeting is to continue discussion regarding the preliminary levy for 2006.
Mayor Droste encouraged Council Members to contact staff with specific questions or requests for
additional information related to the preliminary budget. Staff has not received any requests
ISSUE
The City Council must take action to certtfy its prehmmary tax levy for 2006 at the first meeting in
September. The preliminary levy is the figure that will appear on property owners' truth -in- taxation
notices received m November 2005. The preliminary levy sets the maximum tax rate the City may impose
for Pay 2006 property taxes The City Council may reduce the tax rate pnor to adopting a final budget and
tax levy in December 2005.
Finance Director May has received one piece of new information since the past meeting The City's
projected Fiscal Disparities formula has been updated. The change ends up being reflected by a
preliminary tax rate reduction of 1 3% rather than the ongmally proposed 1.7% reduction.
As discussed at the meeting, there are essentially three options at the Council's disposal for setting the
preliminary levy.
First is to set the levy based on the total budget requests summarized m the July 28 packet, which would
result in a prehrniriary tax rate increase. This would allow the Council maximum flexibility in terms of
total funding sources (understanding that Council maintains the prerogative of reallocating those funds to
initiatives and programs differently than those contained m the requests and Admuustrator
recommendations) The obvious downside is that truth -m- taxation notices would reflect a tax increase.
Property owners will most likely take note of this fact without considering what the final rate may be (if
reduced), and will not likely note the difference when Pay '06 notices arrive without significant efforts at
commumcatlon by the City.
The second option is to set the preliminary tax rate at the same level as 2005. This would maintain
flexibility for the Council m making programmatic decisions with roughly $130,000 of funding resources
above the Administrator recommendations. Again, the Council also maintains the option of further
reducing the tax rate m the final December action.
The third option is to set the preliminary levy at a figure at or below that contained m the Admuustrator
recommendations. This would be consistent with the adopted goals of continuing progress on moderating
the City's tax rate position, and property tax notices to residents would reflect that continuing progression.
It would mean less flexibility m making final budget decisions.
Once the Council has settled on a preliminary tax levy, staff will begin the process of developing future
year budget projections to analyze the impact of current decision making on long -term strategic goals
This would be the substance of budget discussions in September, October and November, in tandem with
more detailed discussion of specific departmental budget review.
Related to that, staff has provided a Residential Lot Inventory Buddout Projection for final and
preliminary platted lots in the community. Discussion at the July 28 Work Session pertained to building
permit revenues and projections of contmued residential growth. The attached spreadsheet is provided as
context for that aspect of the budget and the information will be factored into the future year projections.
SUMMARY
Staff requests direction from the City Council to set a preliminary levy and tax rate at the September 6 City
Council regular meeting.
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Market Value Based Referendum Levy Fire Station
Last Updated 8/10105
SPREAD LEW COMPUTATIONAL WORKSHEET
(INCLUDING FIRE STATION LEVY)
(Proposed)
2003 2004 2005 2006
Total Funding Requirements 10,021,884 14,088,246 14,809,814 16,293,590 (5)
Less Internal Revenues 1,930,789 6,165,131 6,258,800 6,757,700
Less Market Value Based Levy Fire Station (See Below) 156,130 152,193 153,426 154,308 (4)
Equals: Revenues Needed 7,934,965 7,770,922 8,397,588 9,381,582
Add Back in State MVHC Cuts to Reflect Actual Levy n/a 350,330 n/a 350,330
City Adjustments (All Subtractions)'
Local Government Aid (LGA) 402,142 0 0 0 (2)
Homestead Agricultural Credit Aid (HACA) 0 0 0 0 (2)
Levy Certified by City to County Auditor 7,532,823 8,121,252 8,397,588 9,731,912
County Auditor Adjustments (All Subtractions)•
Fiscal Disparities Distributuion Levy (Metro Area) 771,998 844,509 804,414 770,288 (3)
Spread Levy Used to Compute Local Tax Rate 6,760,825 (1) 7,276,743 (1) 7,593,174 (1) 8,961,624
Increase from Previous Year in Spread Levy 7 63% 4 35% 18 02%
156,130 152,193
153,426 154,308 (4)
(1) Actual Spread Levy Based on Numbers from Dakota County
(2) 2006 Numbers Provided by Minnesota Department of Revenue
(Year 2002 HACA is removed as the HACA was repealed by the legislature Year 2004 City loses all of its LGA)
(3) 2006 Number Provided by Dakota County as of 8/10/05
(4) Market Value Based Levy for Fire Station Based on $154,308 Levy Spread to Taxable Market Value on 12/31/05
Last Update from Dakota County 2124105 Shows the Levy of $154,3081$1,922,586,300 0803 per $1 000 as our Estimate
(5) In 2004 Started Including the Water, Sewer, Storm Water Arena Enterprise Funds in These Figures
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