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Home My WebLink About2.b. 2011 Budget4ROSEMOUNTEXECUTIVE SUMMARY CITY COUNCIL City Council Work Session: August 11, 2010 AGENDA ITEM: 2011 Budget AGElp( DA SECTION: PREPARED BY: Dwiaht Johnson. Citv Administrator AGENDA NO. ATTACHMENTS: Budget summary sheets; memo on Community Development staffing; liability APPROVED BY: Insurance spreadsheet. RECOMMENDED ACTION: Discuss new information and proposed adjustments BACKGROUND The City Council has previously reviewed information on the 2011 budget on March 16th, April 14th, and June 9th. An actual draft budget was presented on June 9th that proposed to reduce taxes on the median home by $46. This reduction is in addition to the $77 reduction accomplished with the 2010 budget. At the June 9th meeting, staff indicated that additional information would not be generally available until August. The new information is presented in two categories: (1) New data from outside agencies, (2) proposed adjustments to the draft budget presented on June 9th. In addition, we are presenting a budget update for 2010 at the end of this memo. The Council must approve a "not to exceed" tax levy by September 15, 2010. Because of our schedule, we are planning for the preliminary budget and levy to be presented on September 7, 2010. NEW INFORMATION FROM OUTSIDE AGENCIES 1. Levy Limit Calculation. The Minnesota Department of Revenue provides the official levy limit information to all cities. The 2011 levy limit information has not yet been received at this writing. However, based on our knowledge of the formula, we are $379,830 under the levy limit if we keep all current debt levies. Debt levies are exempt from the levy limit. However, to provide the maximum flexibility in the use of levy dollars, we are proposing to fund the required levies for three bond issues with general levy dollars. If we do this, we will be about $17,000 under the estimated levy limit. 2. Fiscal Disparities calculation. Fiscal Disparities is a metro wide redistribution of a portion of the commercial /industrial property tax base according to a formula. It affects our tax base calculation and therefore can influence our tax rate and the taxes paid by individual properties. We will not have updated information from the County on fiscal disparities for another week or two. The draft budget continues to assume fiscal disparities numbers for the current year until we receive updated information. 3. Health Insurance Quotes. Health insurance quotes for 2011 from the Southwest Cooperative of which we are a member will not be available until August 20th. This budget draft therefore continues to show a 10% increase in premium costs. We would propose to adjust the preliminary budget to be adopted on September 7th up or down by the amount the actual quote is above or below our projection. 4. Calculation of our citywide tax valuation from Dakota County. More precise figures are now available from Dakota County regarding our property tax base. While these figures do not affect the City budget, they do affect the calculation of tax impacts on various properties. The latest figures show a slight decrease in the tax capacity value from the preliminary figures we had earlier this year. PROPOSED ADJUSTMENTS TO JUNE 9th DRAFT BUDGET 1. Increase parks maintenance budget by $3,000 to provide for maintenance of City open spaces. It was recently determined that there is a need for weed control in City open space areas but no specific budget exists for this purpose. More spot weed control and possible prescribed burns are foreseeable future needs. Therefore, we propose creating an ongoing line item for this purpose. 2. Increase revenue from School District 196 by $2,200.00. A definite revenue estimate has now been received from ISD 196 which is an increase of 3% over last year for having a police officer in the high school. This revenue line is in the General Fund. 3. Increase Police budget for CJIIN by $3,000.00. CJIIN is the Dakota County agency that assists all police departments in the County with certain types of police software. CJIIN is not raising their budget; rather, it was recently determined that the cost allocation for CJIIN among Dakota County cities should be based on more up to date population figures for each City rather than the 2000 Census. While this is fair, it results in an increase for several of the high growth cities in the county. 4. Increase Street training budget by $1,000.00. This is not an increase over the 2010 budget, but rather an increase of the sharply reduced training budget presented on June 9th. Upon further review, the June 9th draft budget cut the training budget too far and would unduly limit important training opportunities specific to the jobs of maintenance workers such as snow plowing training. This budget line is still $500 below the 2010 level. 5. Increase health insurance cost by $6,600.00. This increase is not related to any general increase that may occur for next year, but rather due to the fact that one of our employees is known to be switching from single coverage to family coverage. The City picks up 65% of the cost of family coverage for any full time employee. 6. Increase Fire Department budget for 800 mhz radio service by $2,000.00. Our June 9th draft budget was too aggressive in forecasting a reduction in this cost, but even with this increase will still be $1,000 below the 2010 budget. 7. Increase electricity for street lights in Street budget by $5,000.00. Since our June 9th draft budget, a final rate increase has been determined for Dakota Electric, and Xcel Energy is forecasting a similar increase. We are also informed that there are taxes and fees that get added to the rate increase. While we allowed for some increase in the June budget draft, it appears now to be somewhat low. 8. Add $10,000.00 to the City Council budget to provide funds for a Regional Economic Development Entity (REDE). The Itasca Group of major business leaders and the Regional Council of Mayors are establishing a new regional entity to promote the Twin City area for economic development. Currently, there is no agency that does this in our area, but many other major metropolitan areas do have a regional economic development body. About two- thirds of the money will come from the private sector with a significant amount already pledged. Suggested funding amounts have been proposed for cities and counties in the region according to population categories. 2 Rosemount would be asked for $10,000. Although we are not one of the larger cities in the metro area at this time, we believe that we will get our share of attention from the efforts of a REDE group because of our amount of available land and in particular because of the UMore property and the active presence of the University in our city. 9. Staffing in Community Development. Kim Lindquist has prepared a separate memo updating the Council on current and planned staffing arrangements. We are budgeting for only one -half of the year for the currently vacant building inspector position. This will save $41,000 in salaries and benefits in 2011. When the economy recovers sufficiently to justify filling the vacant position, presumably there will be a notable upswing in building permit revenues to restore the added cost without raising taxes. 10. Reduce the levy for City liability insurance by $30,000.00. Over a number of years, the City has accumulated a balance of about $550,000 in the Insurance Fund. This provides a major opportunity to restructure the City's liability insurance with a different high deductible plan. The current deductible is only $500. The City gets its insurance from the League of Minnesota Cities Insurance Trust ( LMCIT). With the assistance of LMCIT and Judy Miller of the City Finance staff, our insurance broker has prepared a spreadsheet (separate enclosure) showing that the City would have had a net savings of about $50,000 per year over the past five years if a high deductible plan ($100,000 per event; $200,000 aggregate) had been in place during those years. While this suggests that there is an opportunity to reduce our tax levy for insurance by $50,000 per year, we believe the conservative approach for the first few years is to assume an annual savings of $30,000 per year and adjust our levy downward by that amount. NET IMPACT ON PROPERTY TAX LEVY OF ALL BUDGET AND REVENUE ADJUSTMENTS (Items 1 -10 above) FROM JUNE 9 BUDGET DRAFT: 442,600. 2010 BUDGET UPDATE 1. Property Tax Receipts. The City receives its property tax levy from Dakota County in two payments, one in July and one in December. Since this is our major source of General Fund revenue, and because of ongoing foreclosure issues, staff is watching our property tax collections more closely than usual. The July tax payment, including delinquent taxes, exceeded 50% of our total budgeted amount. 2. SKB revenues. The City revised its agreement with SKB in 2008 and is budgeted to receive a total of $525,000 this year. In 2009, the Council designated $400,000 for general operating fund revenues and $125,000 for capital funds. SKB fund receipts through July, 2010 already total about $373,000. There is likelihood that we will receive notably more revenue from SKB this year than budgeted. SKB officials believe that our receipts for 2011 should approximate this year. The fees we receive depend heavily on the volume of activity they have, so it is not possible to predict that the higher level of SKB funding will be a long range phenomenon. Accordingly, staff does not recommend that any additional SKB funds be used to support operating budgets. However, the opportunity to enhance one or more of our capital improvement funds may occur. Currently, staff is inclined to recommend that any SKB funds above the amounts budgeted be placed in the Building CIP fund. There are several possible Building CIP projects that may be good candidates for the use of additional SKB funds. One possibility is using about $100,000 to tear down the Genz -Ryan buildings. These buildings are increasingly not only an eyesore, but also a safety hazard and an impediment to redevelopment. Previous efforts to have a private developer clear the land or to get a grant to do so were not successful. Another possibility for additional SKB funds would be for 3 the possible redevelopment of the City property north of the Steeple Center. The Council has recently viewed sketch plans for a possible Senior Housing development on this site. Finally, there is a water issue at the Community Center that will need attention and may cost $50,000 - $100,000. 3. Revenues and Expenses through July 31. Through seven months of our fiscal year, we have received 55.7% of our General Fund revenue for the year and have expended 55.2% of our budget. We are now 58.3% through the fiscal year. OTHER BUDGET ITEMS 1. Date for public hearing on the budget. At the September 7th meeting, we must set and announce a date and time for the public hearing on the final budget. Staff recommends that the hearing be held at 7:30 p.m. on the December 7th regular Council meeting. 2. Capital Improvement Budgets. Staff plans to come back to the Council in October or November to discuss the three Capital Improvement Budgets: Equipment CIP, Building CIP, and Street CIP. Preliminary discussion of the street improvement program is elsewhere on this agenda. There is also some discussion of the Building CIP above. The major discussion we will need to have on equipment later this year relates to our 24 year old first response fire truck. Levies for all the Equipment and Street CIP budgets are set for our long term needs and are not dependent on expenditures in any particular year. 3. PEG (Public, Educational & Governmental) fees on cable TV bills. The three city cable commission (Apple Valley, Farmington & Rosemount) has asked the Council to consider an increase in the PEG fee for cable TV customers from $30 to $.60 per month. While increasing the PEG fee would not change how much the City owes the Cable Commission, it would reduce the amount of property tax needed for this purpose by $4,847.97. Residents with cable TV service would see an increase in their bills. The City has been requested to decide this matter by September 30th to meet a notice deadline to Charter to make this change. The draft budget does not currently assume any increase in PEG fees. CONCLUSION Overall, with the changes and modifications listed, the City's property tax levy would decline by $214,368. Overall City budget requirements would decline by 2.40 %. Finally, the City tax on a median valuation home would decline by $46 from $948 to $902 per year. The Council should review these changes and determine if any additional changes should be made in the draft preliminary budget before it is scheduled for approval on September 7th. 4 FUNDING REQUIREMENTS - USES (INCLUDING FIRE STATION LEVY) August 11, 2010 NOTE: Special Levies include (1)Bonded Indebtedness, (2)Fire Station Levy and (3)Armory Anticipatory Levies. 2010 2011 Adopted Proposed +/- Departments Budget Budget Difference Percentage Council Budget $256,500 $247,100 ($9,400) -3.66% Administration Budget 520,300 514,200 (6,100) -1.17% Elections Budget 40,000 22,000 (18,000) - 45.00% Finance Budget 422,300 420,800 (1,500) -0.36% General Government Budget 387,700 385,100 (2,600) -0.67% Community Development Budget 945,700 928,200 (17,500) -1.85% Police Budget 3,030,300 3,109,200 78,900 2.60% Fire Budget 301,800 303,600 1,800 0.60% Public Works Operating Budgets: Government Buildings Budget 490,200 491,900 1,700 0.35% Fleet Maintenance Budget 612,300 568,600 (43,700) -7.14% Street Maintenance Budget 1,331,300 1,355,000 23,700 1.78% Parks Maintenance Budget 723,900 733,100 9,200 1.27% Park & Rec Budget - General Operating 1,077,500 1,069,500 (8,000) -0.74% Park & Rec Budget - Steeple Ctr. Operations 87,500 87,500 0 0.00% Park & Rec Budget - Special Programs 123,700 102,400 (21,300) - 17.22% Transfers - Arena Assistance 115,000 - -- ----- ------- 115,000 0 0.00% Total Operating Budgets - General Fund $10,466,000 --- ---- -- $10,453,200 ($12,800) -0.12% Transfers - Debt Service Levies 0 -- -- ----- 362,376 362,376 n/a Total Of All Budgets - General Fund -- - - -- -- $10,466,000 -- --- ---- $10,815,576 - ---- ----- $349,576 -- - --- -- 3.34% Building CIP Requirements 24,000 44,000 20,000 83.33% Street CIP Requirements 700,000 710,000 10,000 1.43% Equipment CIP Requirements 439,000 439,000 0 0.00% Insurance Budget Requirements 275,000 245,000 (30,000) - 10.91% Port Authority Operating Levy 50,000 48,600 (1,400) -2.80% Bonded Indebtedness 729,471 168,914 (560,557) - 76.84% Bonded Indebtedness - Fire Station Levy 142,273 143,654 1,381 0.97% Armory Anticipatory Levy (Value 2/18/10) 80,000 86,000 6,000 7.50% "$2,060,560,350 x.00798% = $164,433`" Water Enterprise Fund 1,353,900 1,172,900 (181,000) - 13.37% Sewer Enterprise Fund 1,671,300 1,678,000 6,700 0.40% Storm Water Enterprise Fund 670,300 672,200 1,900 0.28% Arena Enterprise Fund 458,000 ------------------ 425,400 (32,600) -7.12% Total Funding Requirements $17,059,244 __________ ------- --------- $16,649,244 _______ _ __ - ---- --- ---- - -- ($410,000) __________ --- ----- - --- - 2.40% ____ _ _ _ __ NOTE: Special Levies include (1)Bonded Indebtedness, (2)Fire Station Levy and (3)Armory Anticipatory Levies. August 11, 2010 Types FUNDING REQUIREMENTS -SOURCES (INCLUDING FIRE STATION LEVY) Internal Revenue Generated: Licenses and Permits Intergovernmental Charges for Services Fines & Forfeits Recreational Fees Miscellaneous Revenues Transfers In Enterprise Revenues Total Internal Revenues MVHC Cuts Made Later To Include in Levy Levy Sources: Special Levies General Levy Total Levy Loss of MVHC from State Funding Total Revenue Sources 2010 2011 (553,176) - 58.12% Adopted Proposed 338,808 +/- Budget Budget Difference Percentage 382,600 360,100 (22,500) -5.88% 566,500 624,700 58,200 10.27% 655,900 658,400 2,500 0.38% 125,000 125,000 0 0.00% 267,300 252,300 (15,000) -5.61% 178,200 181,300 3,100 1.74% 3,500 3,500 0 0.00% 4,153,500 3,948,500 (205,000) - 4.94% 6,332,500 6,153,800 (178,700) -2.82% 412,575 429,507 951,744 398,568 (553,176) - 58.12% 10,187,575 10,526,383 338,808 3.33% $11,139,319 $10,924,951 ($214,368) -1.92% $412,575 $429,507 $16,932 4.10% $17,059,244 $16,649,244 ($410,000) - 2.40% NOTE: Special Levies include (1)Bonded Indebtedness, (2)Fire Station Levy and (3)Armory Anticipatory Levies. 2010 GENERAL PROPERTY TAX LEVY PAYABLE 2011 GENERAL LEVY GENERAL FUND $9,039,783 BUILDING CIP FUND $44,000 STREET CIP FUND $710,000 EQUIPMENT CIP FUND $439,000 INSURANCE FUND $245,000 PORT AUTHORITY OPERATING LEVY $48,600 TOTAL GENERAL LEVY $10,526,383 BONDEDINDEBTEDNESS G.O. PUBLIC FACILITY BONDS 2001C (Port Authority) (Authorized - $168,914) $168,914 G.O. COMMUNITY CENTER REFUNDING BONDS 2001E (Authorized - $91,883) $0 G.O. IMPROVEMENT BONDS 2003A (Authorized - $86,354) (City Assumed Special Assessments) $0 G.O. CAPITAL IMPROVEMENT PLAN (CIP) BONDS 2005A (Authorized - $210,764) $0 G.O. EQUIPMENT CERTIFICATES 2006A (Authorized - $87,150) $0 G.O. IMPROVEMENT BONDS 20066 (Authorized - $268,201) $0 G.O. EQUIPMENT CERTIFICATES 2007B (Authorized - $107,022) $0 PUBLIC SAFETY REVENUE BONDS 2007 (Dakota Communications Center) (Authorized - $65,258) $0 G.O. EQUIPMENT CERTIFICATES 2008A (Authorized - $94,265) $0 TOTAL BONDED INDEBTEDNESS $168,914 MARKET VALUE BASED REFERENDUMS G.O. FIRE STATION REFUNDING BONDS, 2005D (Authorized - $143,654) $143,654 TOTAL FIRE STATION LEVY $143,654 PRINCIPAL AND INTEREST ON ARMORY BONDS ARMORY ANTICIPATORY LEVIES ($2,060,560,350 x.00798% = $164,433) (As of 2/18/10) $86,000 (Authorized - $164,433 - Only Levy Amount Due MSABC) ------------ _ ----- _ ---- TOTAL PRINCIPAL AND INTEREST ON ARMORY BONDS $86,000 GRAND TOTAL 2010 PROPERTY TAX LEVY $10,924,951 Last Updated 816/10 SPREAD LEVY COMPUTATIONAL WORKSHEET (INCLUDING FIRE STATION LEVY) (Proposed) 2008 2009 2010 2011 Total Funding Requirements 17,855,312 17,288,034 17,059,244 16,649,244 Less: Internal Revenues 6,526,300 6,210,900 6,332,500 6,153,800 Less: Market Value Based Levy - Fire Station (See Below) 144,417 146,084 142,273 143,654 (3) Equals: Revenues Needed 11,184,595 10,931,050 10,584,471 10,351,790 Add Back in State MVHC Cuts to Reflect Actual Levy 0 350,330 412,575 429,507 Levy Certified by City to County Auditor 11,184,595 11,281,380 10,997,046 10,781,297 County Auditor Adjustments (All Subtractions): Fiscal Disparities Distribution Levy (Metro Area) 968,892 1,141,159 1,195,913 1,195,913 (2) Spread Levy Used to Compute Local Tax Rate 10,215,703 (1) 10,140,221 (1) 9,801,133 (1) 9,585,384 Increase /(Decrease) from Previous Year in Spread Levy -0.74% -3.34% -2.20% Market Value Based Referendum Levy - Fire Station 144,417 146,084 142,273 143,654 (3) (1) Actual Spread Levy Based on Numbers from Dakota County (2) 2011 Number Provided by Dakota County as of x/x/10 (3) Market Value Based Levy for Fire Station - Based on $143,654 Levy Spread to Taxable Market Value on 2118110 Last Update from Dakota County 811/10 Shows the Levy of $143,6541$2,066,062,750 = $.0699 per $1,000 as our Estimate Last Updated - 8/6/10 m 01 m m II g N S W � bnY] P l'l 11 O NS oil 0 0 0 0, E II O G O N I II 000 8 ! II S i O i h r i h S I I ry g O O g 17 M c V b N V I I N p ONN O 11 O M N 0000 r �� O 00 ,I oco 1 8o M p.-p O/ pm O! II O O Oj N N fV O 8 6666 C II S II O O G ° II O a W N O N N O O 11 N N II G C 6 C W i 11 1LL S N Nlbpbm mN II 8O p N O� N atrVN� gS O 11 N8 N N j 0006 .- N 1 „ coo II p p W y I N M N Ol m' II M O Y 7 I O N ONIV 11 ONg H Z N 6000 ( 0 11 S S S go- :E g pg °p o v memo olm I Ira ii m�� W a 3 W N ONtbV O I O 1j ON S f m W N II O O C v�yo C I a i ii : COMMUNITY DEVELOPMENT M E M O R A N D U M To: City Council From: Kim Lindquist Date: August 5, 2010 Re: Community Development Staffing Update This memo is to update the Council on the staffing changes occurring in the Community Development Department. Some time ago the Council requested an update on the staffing for the department given some recent changes. The following itemizes the current operations for the department: • In June the Council took action to layoff one building inspector. Since that time the Building Official is the person backfilling inspection tasks. Some special project work, such as closing out dormant building permits, will occur during off -peak times rather than the busiest construction time. • Although building permits are down, complaints are up requiring additional code enforcement work. Code enforcement is a high priority during the summer months. The code compliance inspector spends most of his time on that task with Fire Marshal duties rounding out his work week. The sequential inspection task has been shifted to Planning with the senior planner handling calls from residents in the targeted inspection areas. • After approaching the department about a voluntary hour reduction program there was one building secretary who had hours reduced to 36 hours /week. However, that position has now taken all clerical duties associated with the code enforcement, including writing letters and electronically monitoring the caseload, which was not done previously. The two building secretaries have also been approached to become the permanent back up for the city hall receptionist. Currently there is a rotation system which requires certain employees to sit at the receptionist desk; being less productive. It is intended that the city hall phones will be accessed by the building secretaries and a sign or other notification made to residents who come to city hall forwarding them to the building window when the receptionist is unavailable. During longer absences, other departments have agreed to assist so building and reception work can be accommodated without a change in service. This modification will lead to increasing the one secretary back to 40 hours /week. • The GIS position is currently unfilled due to the employee moving out of state. There are numerous projects identified for this position on a long term basis as well as a myriad of short term projects that come up. In recognition of budgeting issues, staff is looking to fill the position as a 30 -hour /week position. Staff will be investigating use of a summer intern for specific projects that can be conducted in a 2 -3 month time period. 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