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HomeMy WebLinkAbout2.b. Preliminary Discussion of 2019 Budget EXECUTIVE SUMMARY City Council Work Session: May 1, 2018 AGENDA ITEM: Preliminary Discussion of 2019 Budget AGENDA SECTION: Discussion PREPARED BY: Logan Martin, City Administrator Jeff May, Finance Director AGENDA NO. 2.b. ATTACHMENTS: None. APPROVED BY: LJM RECOMMENDED ACTION: Discuss parameters and provide direction for 2019 Budget BACKGROUND As discussed at the goal setting session with the City Council, staff wishes to engage the Council in a preliminary discussion of the 2019 Budget. General parameters and direction on the budget is requested, as staff is currently in the process of completing initial budget drafts. Based upon direction received from the Council, Finance Director May and I will begin the internal process of discussing budget requests with department heads, with a preliminary budget likely presented to the Council at a work session in June. Personnel costs are the main component of the City’s budget, and two factors are shown below that significantly impact the annual budget: • The City’s 4 unions have contracts in place for 2019 that include 2.75% cost of living adjustments. • Based on running averages, staff anticipates an up to 7% increase in insurance benefits in 2019, which need to be accounted for in the budget. The City has received some initial data from Dakota County that is helpful in guiding this discussion. Three data points are provided below. • Median Valued Home in Rosemount estimated at $279,300 in ’19, a 7.51% increase. • City’s Taxable Market Value is projected to increase by $192,175,412 in ’19, a 7.42% increase. • New construction accounts for $47,809,200 of the City’s value increase (4th highest in County). Based on the growth in the City via both new construction and market strength, modest budget adjustments to account for the aforementioned costs could be absorbed. For example, a 4% increase to the levy would likely result in a decrease to the City’s tax rate. Any increase in taxes paid by a resident in that scenario would largely be attributable to their property’s increase in value (projected at 7.51%). RECOMMENDATION Staff requests the City Council provide direction on general parameters for the 2019 Budget to aid in internal discussions toward preparation of the preliminary budget.