HomeMy WebLinkAbout3. 2012 Preliminary Budget and Tax Levy &dcu ."+ex 3.
To: Mayor and City Council
Mark McNeill, City Administrator
From: Julie A. Linnihan, Finance Director
Topic: 2012 Preliminary Budget and Levy Discussions
Date: August 25, 2011
Introduction:
The City Council and staff have held several budget discussions and will be meeting on September 6th to
approve the preliminary budget and property tax levy. The City has recently received the anticipated tax
rates from Scott County, which allow for the adjustments to TIF, Fiscal Disparities as well as the newly
legislated Market Value Exclusion program.
This information was presented at the August 16 City Council meeting, which generated discussion on
several topics. These will need resolution in time to adopt a preliminary levy at the September 6 th City
Council meeting.
Building Internal Service Fund:
The Internal Service Funds of the City provide for a Building Internal Service Fund, as well as a Park Asset
Fund. The information presented at the worksession will outline the history and status of the Building
Fund and provide options for discussion regarding:
• Continuing development of policies for utilization of the fund resources, and prioritization of
projects
• Restructuring of the Building and Park Asset funds, removing the Recreation area from the
Building Fund and placing the assets and rents in the newly created Park and Recreation Asset
Fund, beginning in 2012
• Review of options for adjustments to rental rates in 2012, and the potential impact of the rate
adjustments on the estimated fund positions
Capital Improvement Levy:
During previous discussions, the City Council and staff have discussed establishing a levy for Capital
Street Improvements. During the worksession, Council will need to direct staff on the following:
• Establishment of a Capital Levy
• Funding source for the proposed levy
• Whether levy will be an additional levy, as a specific line item on the property tax statement, or
whether a Capital Levy amount will be transferred from an existing fund, such as the General
fund or an Internal Service fund.
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Debt Service Levy:
Attached for review, future information and discussion is a work paper that details the status of the
Debt Service funds that have been established when bond issues are undertaken by the City. As the
memo states, the cancellation of previous debt service levies will not require additional levy funding for
2012. As Council proceeds with future debt service levy discussions, this information has been provided
to update Council on the status of existing debt, the annual payments on this debt as well as addressing
the concerns related to commitment of funds for projects. As previously discussed, future projects may
require a tax levy increase if debt is issued for project cost coverage and other sources of funds are not
available.
Preliminary Property Tax Levy:
The Council has received information regarding the departmental budgets, changes to the Market Value
Homestead Credit program, as well as the implementation of the Market Value Exclusion program. This
new program has impacted the tax levies of the City from 2011 to anticipated 2012 by increasing the tax
rate, while holding the tax levy amount flat. As information is routed out to governmental entities, it
appears that this will result in all Minnesota cities and counties facing a difficult dilemma in preparing
their preliminary levy amounts for 2012.This legislation appears to pass on state aid reductions to the
property owners, even if the levy is held flat from 2011 to 2012.
Attached for your review and discussion is a chart that details the information received from Scott
County, outlining the 2011 data, allowing for the 2012 flat levy data and bringing in the request from the
August 16 meeting, which would add one point to the 2012 tax rate. This would result in an increase in
the levy of $354,562. This point increase provides for significantly less property tax revenue that
estimated, as the calculation factors, similar to the existing programs, have undergone changes. An
additional calculation has been applied for the determination of the impact of holding the tax rate for
2012 flat with the original 2011 tax rate. This will result in a decrease in property tax collections of
approximately $642,438.
As Council considers the information provided, there are still some areas of the budget that will require
discussion and decisions, as follows:
• Personnel determinations for:
o Filling the 47 Patrol position
o Fire Duty Crews
o Maintaining Custodial position or filling with contract position
• Capital Levy
• Building Internal Service fund rental rate determination
Staff continues to develop the final policies and documents for revisions to the Internal Service funds,
but Council direction is needed to determine the rates used in the final budget document.
As in previous years, the preliminary budget and tax levy to be adopted prior to the September 15th
deadline cannot be increased, but may be adjusted downward, prior to the final levy adoption in
December, 2011.
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