The URL can be used to link to this page

Home My WebLink About9.b. 2019 Budget EXECUTIVE SUMMARY City Council Regular Meeting September 18, 2018 AGENDA ITEM: 2019 Budget AGENDA SECTION: New Business PREPARED BY: Logan Martin, City Administrator Jeff May, Finance Director AGENDA NO. 9.b. ATTACHMENTS: Resolution, 2019 Preliminary Budget Summary APPROVED BY: LJM RECOMMENDED ACTION: Adopt a Resolution Setting the Preliminary 2019 General Fund Operating Budget, the Preliminary 2019 C.I.P. Budgets, the Preliminary 2019 Insurance Budget, the Preliminary 2019 Port Authority Operating Levy and the Preliminary 2018 Levy and a Budget Hearing Date of December 4, 2018 at 7:00 p.m. at City Hall. EXECUTIVE SUMMARY In response to direction received from the City Council at work sessions in June and August, staff is prepared to present the City’s Preliminary Operating Budget and Preliminary Levy for 2019. The City is required to establish a “ceiling” for the tax levy by the end of September, which allows the City the opportunity to reduce the levy after the ceiling is set until final certification in December. A final work session in November is planned to discuss any final changes to the budget prior to final certification. The recommended 2019 Budget proposes an increase in the City’s property tax levy of 4.51 %. This levy increase results in an estimated annual increase of $54 in the City taxes assessed to a median valued home. The estimated City tax on a median valued home ($279,300) would be $1,061 in 2019. The median valued home saw an increase in assessed value of 7.51% thanks to a strong local housing market. Even with the increases proposed for 2019, an owner of a median valued home is only paying $3 more in City taxes in 2019 than they paid in 2008. It is important to note that the City’s tax rate is going down while the amount of City taxes paid by a homeowner is going up. This is due to market value increases in property values as assessed by Dakota County (7.51% citywide). If a homeowner were to see no value growth on their property, their taxes would actually decrease by $36 (on a $300,000 home). A summary of key characteristics of the proposed 2019 Budget is shown in the following table: A summary of the main expenditures leading to the budget increase is discussed later in this memo. The budget shows some increased personnel costs reflecting new full time employees, increased funding for the City’s long-range maintenance plans, and overall increased wages and benefits for 2019 based on the Budget Facts at a Glance Growth of Property Tax Base from ‘18 + 7.27% Avg. value increase on Median-Valued Home + 7.51% Change in General Fund Budgets + $706,500 or 5.4% City Tax Increase on Median Valued Home + $54 % Tax Change on Medan Valued Home + 5.36% Change in Estimated City Tax Rate - 3.03% (from 0.40961 to 0.39722) 2 City’s current labor contracts. 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. A public hearing on the budget will be scheduled for December 4th at 7:00 p.m. in the Council Chambers. BUDGET PROCESS The drafting of the 2019 Budget ultimately began with and was inspired by the City Council’s goal setting retreat in March. The goals and five year strategic initiatives discussed during that process were instrumental in the creating of each department’s budget request. After each department submitted their 2019 request, Finance Director May and I met individually with each Department Head to discuss all requests and receive further explanation as to their necessity. A number of items were removed via those discussions and 3 drafts were completed internally prior to Council review. In addition, as a part of the budget review we have looked 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 for parking lots, playgrounds, etc. Finally, as has been the direction in year’s past, staff looked at the overall budget strategically for its overall balance and consistency, effect on taxpayers, and long term impacts on finances for 2018 and beyond. Our intent 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 28th after a public hearing. GENERAL FACTORS AFFECTING THE BUDGET Tax Base For the sixth consecutive year, the overall tax base in the community has increased. The overall tax capacity value within the City is estimated to be 7.27% higher in 2019 than it was in 2018. The increase in market value of the median home in Rosemount is 7.5%. State Budget and Legislative Impacts There were no significant changes in State legislation in 2019 impacting the Budget, and there are no levy limits in place for 2019. REVENUES Property taxes fund 73.5% of the General Fund budget. However, there are several other categories of General Fund revenues that are also important to the City. The chart on the next page compares budgeted revenue for several key categories. 3 2018 Budget 2019 Estimated Change Licenses & Permits $729,200 $749,800 + $20,600 Intergovernmental $747,800 $1,066,500 + $318,700 Chargers for Services (no SKB) $634,100 $583,100 - $51,000 SKB Revenue $675,000 $675,000 + $0 Fines & Forfeits $115,000 $115,000 + $0 Recreational Revenues $236,500 $256,500 + $20,000 Miscellaneous Revenue $163,800 $172,700 + $9,600 Because staff anticipates another strong housing pattern in 2019, building permit revenues are projected to increase to $525,000. This is the highest revenue projection the City has seen since 2006. The charges for services category includes $200,000 in plan check fees, which are related to building permits. Staff continues its practice of being conservative on these projects, as these revenues are exposed to many factors in the local economy. EXPENDITURES Salaries Rosemount currently has 85 full time employees (FTE), which compares with 81 FTE at the beginning of 2008. Two new FTE (patrol officers) are included in the 2019 Budget. Funding for these positions is calculated based on a June hiring, which would coincide with the Department’s internal training and development plan. The 2019 Budget also includes the reclassification of the current part-time IT Specialist to a full-time position. Information technology continues to be an area in need of additional support, especially as the City continues to more strategically utilize technology in all facets of its operation. All four labor bargaining units are currently under contract, so salary and benefit budgets reflect those agreements. Health Insurance Staff anticipates receiving complete information about health insurance renewals in late September. Preliminarily, it looks as if the City will be receiving favorable rates for health insurance next year. Dental insurance is currently out for competitive bidding. As a reminder, the City is no longer in an insurance co- op due to last year’s decision to solicit additional bids. Capital Budgets The City currently has three capital improvement program (CIP) funds: Equipment, Streets, and Buildings. The Council preliminarily reviewed the CIP at a work session in September. The levy for the Equipment CIP is proposed to be $620,000, an increase of $20,000 due to future forecasted needs. The Street CIP is proposed to have a levy of $852,327, an increase of 8% to account for upcoming street / County road projects. Enterprise Fund Budgets Proposed water, sewer and storm water utility rates and budgets were recently reviewed by the Utility Commission and will be reviewed in further detail with the Council later this fall. RECOMMENDATION The proposed 2019 Budget and Levy reflect modest adjustments to account for the growth that the community has experienced in recent years and anticipates continuing to see into the future. The proposed levy of increase of 4.51% would mean that Rosemount would once again have one of the lowest municipal levy increases in the County in 2019, while still maintaining the City’s service levels and long- range equipment and facilities replacement schedules. 4 Further discussions with the City Council will occur this fall to finalize a few remaining points of discussion and to establish the final 2019 Budget and Levy. Staff recommends that the City Council establish the Preliminary 2019 Budget and Levy. CITY OF ROSEMOUNT DAKOTA COUNTY, MINNESOTA RESOLUTION 2018 - 80 A RESOLUTION SETTING THE PRELIMINARY 2019 GENERAL FUND OPERATING BUDGET, THE PRELIMINARY 2019 C.I.P. BUDGETS, THE PRELIMINARY 2019 INSURANCE BUDGET, THE PRELIMINARY 2019 PORT AUTHORITY OPERATING LEVY AND THE PRELIMINARY 2018 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 2019 will be in the amount of $21,669,127 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 total $282,507 for 2 City issues (G.O. Public Facility Refunding Bonds 2010B and G.O. Capital Improvement Plan Refunding Bonds 2015B) and no levy is necessary for any other City issues (utilizing other revenue sources); and WHEREAS, the City Council has determined that actual incomes, fund transfers and anticipated aids will total $9,541,000. NOW, THEREFORE BE IT RESOLVED, that the total Preliminary Levy certified to the Dakota County Auditor shall be $12,410,634; 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 4, 2018, at 7:00 P.M., in the Council Chambers at the City Hall. ADOPTED this 18th day of September, 2018. _____________________________ William H. Droste, Mayor ATTEST: __________________________ Erin Fasbender, City Clerk RESOLUTION 2018 - 80 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 18th day of September, 2018, as disclosed by the records of said City in my possession. (SEAL) _______________________________ Erin Fasbender, Rosemount City Clerk