The URL can be used to link to this page

Home My WebLink About7.C. 2015 Budget Process Overview vwtA 7. C. SHAKOPEE TO: Mayor and City Council FROM: Mark McNeill, City Administrator DATE: 06/24/2014 SUBJECT: 2015 Budget Process Overview Introduction Action Sought: Review and discuss the anticipated budget 2015 process. Background: The annual budget process is typically initiated each year after the Legislative session is complete,when the City can accommodate any changes that will impact the future year budget. This year's 2014 budget planning was impacted by several major items--such as sales tax and PERA changes--which impacted the departmental planning needs and budget requests. The League of Minnesota Cities provides budget assistance to communities through a budget resource guide,and a summary of the newly approved legislation. Several City Council members and some staff recently attended sessions on these legislative updates. Legislative Action A major change for 2015 budget preparation is the removal of the property tax levy limits. The 2014 budget allowed a 3 %cap on the preliminary and final property tax levy.As a result,theGeneral fund levy increase was limited to an additional $459,997. The debt service levies were not restricted under the levy limits legislation. This allows the local governmental units to establish the property tax levies. The sales tax exemption,which was partially enacted in 2014,has been revised to allow for a broader interpretation of the exempt activities. This will allow for a more consistent application of the exemption, specifically related to recreation services and purchases. and to joint powers agreements. This refinement will also more clearly define construction and contract related costs that have been subject to sales tax. The specifics of this legislative change will be reviewed and discussed with each City department, and the impact on their budget preparation. Personnel In both the 2013 and 2014 budget years,employee positions were added to the General fund and Economic Development fund budgets. The 2015 budget preparation will provide for the personnel costs specific to these position additions. The City's three union contracts have been settled for the years 2014,2015 and 2016. This will allow for a more accurate calculation of wages and related costs, such as PERA and FICA. The benefit costs specific to insurance will be estimated for 2015,but preliminary indicators anticipate single digit percentage increases. The estimates for personnel related costs will be provided to departments.. The 2015 budget will also allow for the full year costs of the newly created positions or any position upgrades per department. Transfers In 2013 and 2014,the General fund budgets were provided for a specific transfer from the General fund to the Capital Improvement Project Fund(CIP). This funded specific capital and infrastructure needs of the City,as identified in the 5 year Capital Improvement Project detail. The City has been increasing the level of this transfer for the specific projects as follows: •2013 -$500,000 •2014-$ 750,000 •2015 -$1,000,000(recommended) The establishment of this transfer will continue to allow the Engineering staff to plan for the 5 year plans. The increase to the CIP transfer is reflected as a General property tax levy,and is an important component of the budget planning process. Scott County Property Information The most significant change that will be discussed during the budget process is what Scott County has determined for the property tax values. The most recent data received from Scott County states that the City will experience a roughly 13%increase in value from the prior year. As the tax appeals and other related actions move forward at Scott County,this information will be updated and provided to City Council. Debt Service The City currently has 9 outstanding debt service levies. The 2014 budget process allowed for the inclusion of the 2006 debt service levy,which provided for actual debt service payment coverage,rather than the reduction of the City's cash position in the debt service funds. The 2015 budget will provide a detail of the status of the funds for Council review,and subsequent determination of the necessary 2015 levies. Economic Development The 2014 budget was the first year of General fund transfer for the projects and personnel for the following budget allocations: •A Full Time EDA Coordinator position •Improvement Loan Program funding •Professional services needed to review review business proposals • The funding of Tax abatement, Tax Increment and other business subsidy practices as approved by Council Staff will continue to work closely with the Chamber of Commerce,theEDAC,developers, and other government entities, and business partners—large and small--to provide for an economic climate in Shakopee that willgenerater robust job and tax base growth. Requested Action City Council is requested to discuss and direct staff on the 2015 budget process. Attachments: Scott Co. Property Assessments Reporting Scott County Property Assessment Reporting " u Final Valuation Data for Taxes Payable: 2014 Preliminary Valuation Data for Taxes Payable:2015 Shakopee Value Type Class Type 2014 2015 %Change EMV Total Agricultural 92,579,700 97,086,600 4.87% Apartment 139,095,600 151,509,600 8.92% C/I 873,065,800 927,671,300 6.25% Exempt 591,219,900 598,102,400 1.16% Manufactured Homes* 98,300 98,300 0.00% Other 2,612,600 2,621,100 0.33% PP Public Utility/RR 21,678,400 44,928,400 107.25% Res Improved 2,296,340,000 2,618,273,300 14.02% Res Vacant Land 17,582,500 22,202,400 26.28% Total 4,034,272,800 4,462,493,400 10.61% NC Total Agricultural 136,900 Apartment 7,250,000 C/I 24,950,000 16,430,000 -34.15% Exempt 1,900 Res Improved 22,898,900 24,106,000 5.27% Total 47,850,800 47,922,900 0.15% Net Tax Capacity Agricultural 556,708 580,754 4.32% Apartment 1,604,516 1,754,765 9.36% C/I 17,147,194 18,232,202 6.33% Exempt 0 0 Manufactured Homes* 763 763 0.00% Other 33,009 33,137 0.39% PP Public Utility/RR 432,855 896,855 107.20% Res Improved 20,969,295 - 24,505,336 16.86% Res Vacant Land 208,561 240,688 15.40% Total 40,952,901 46,244,500 12.92% Tuesday, March 18,2014 Page 1 of 2 RMV Agricultural 3,711,600 4,373,800 17.84% Apartment 132,411,400 144,579,500 9.19% C/I 873,065,800 927,671,300 6.25% Manufactured Homes* 98,300 98,300 0.00% Other 2,612,600 2,621,100 0.33% PP Public Utility/RR 21,678,400 44,928,400 107.25% Res Improved 2,287,889,400 2,612,574,900 14.19% Res Vacant Land 16,683,700 19,249,200 15.38% Total 3,338,151,200 3,756,096,500 12.52% TMV Total Agricultural 59,362,600 62,117,200 4.64% Apartment 139,065,600 151,480,000 8.93% C/I 873,065,800 927,671,300 6.25% Exempt 0 0 Manufactured Homes* 76,300 76,300 0.00% Other 2,612,600 2,621,100 0.33% PP Public Utility/RR 21,678,400 44,928,400 107.25% Res Improved 2,094,050,000 2,446,598,000 16.84% Res Vacant Land 16,683,700 19,249,200 15.38% Total 3,206,595,000 3,654,741,500 13.98% z *2015 values for monfactured homes for are not established until January 2nd of next year. For the purpose of this report the current year manuafactured home value totals have been duplicated for the next year. Tuesday,March 18,2014 Page 2 of 2 Scott County Property Assessment Reporting �SCOU Parcel Count by Class Type for Assessment Year 2014 Shakopee Class Type Parcel Count Agricultural 87 Apartment 89 C/I 609 Exempt 719 Other 9 PP Public Utility/RR 16 Res Improved 12,033 Res Vacant Land 250 Total 13,812 Wednesday,March 19,2014 Page 7 of 7