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Home My WebLink About13.F.2. 2011/2012 Proposed Tax Levy and Budget-Res. No. 71171 . �: L. City of Shakopee Memorandum TO: Mayor and Council Mark McNeill, City Administrator FROM: Julie A. Linnihan, Finance Director RE: 2011/2012 Proposed Tax Levy and Budget Resolution No. 7117 DATE: August 31, 2011 Introduction Attached is Resolution Number 7117, which sets the proposed maximum 2011/2012 tax levy. Time frames The existing law requires that Shakopee certify a proposed budget, budget hearing date and proposed maximum tax levy to the county by September 15 . The City has to certify the final levy to the county by December 28, 2011. Tax Levv The proposed maximum tax levy for 2011/2012 is shown below. The increase in the total gross levy is due to the recommended increase in the tax rate from the 2011 rate to the 2012 rate, as directed by the City Council at the August 30 2011 work session. The decision to reduce the levy can be made at a later date because it is the maximum proposed levy being adopted now. The levy for the 1997 fire station bonds is already set by previous action and is $248,528. Due to funds on hand, the levy is being reduced to $130,000. This levy is on the assessed market value of real estate and not the tax capacity value. This is the one levy of the City that has been voter approved. The levy amount for future years will be increased to allow for full coverage of the upcoming payments, until the levy is complete, in 2015. Budget resolution prel levy 2012 Proposed Levied 2011/2012 2010/2011 Operating levy $14,695,361 $14,491,650 City levy for EDA 80,000 80,000 Debt service levy 296,639 145,788 Preliminary Levy to be Certified 15,072,000 14,717,438 1997 Fire Station levy referendum 130,000 120,000 Total gross levy S15,202,000 S14 837 438 The decision to reduce the levy can be made at a later date because it is the maximum proposed levy being adopted now. The levy for the 1997 fire station bonds is already set by previous action and is $248,528. Due to funds on hand, the levy is being reduced to $130,000. This levy is on the assessed market value of real estate and not the tax capacity value. This is the one levy of the City that has been voter approved. The levy amount for future years will be increased to allow for full coverage of the upcoming payments, until the levy is complete, in 2015. Budget resolution prel levy 2012 During the recent Budget Work session, the Council requested the increase to the preliminary levy of an amount equal to 1 point to the tax rate, or an increase of $354,562. This amount is reflected in the Preliminary Levy to be Certified, prior to the referendum levy amount. This amount for 2012 will be $15,072,000 in comparison to the 2011 amount of $14,717,438. The City has maintained a flat levy for several years prior to the proposed 2012 increase. Fiscal Disparities For pay 2012 the preliminary city contribution to the pool is $6,431,235 in comparison to the 2011 amount of $6,604,638 in tax capacity. The distribution from the pool is $1,740,447, in comparison to the 2011 amount of $1,630,522. The $1,740,447 is part of the city levy. The tax levy is spread over the property the city's portion is reduced by $1,740,447, for a net levy as opposed to the gross levy the Council adopts. Capital Improvement Funding Throughout the preliminary budget discussions, City Council and staff have addressed the concept of providing for funding source to the Capital Improvement Fund on an annual basis to establish a source of funds that will be specifically designated for the road and street system of the City. As discussed, the City, similar to many suburban areas, will be facing the issue of not only adding new streets and infrastructure, but will need to establish a funding source for the existing streets that will require significant upkeep to maintain the integrity of the system. This preliminary budget and levy contain $200,000 for the funds that will be utilized for the future project work. As future year Capital Improvement Plans are presented to Council, this funding source will be integrated into the funding sources. Internal Service Funds The rental rates for building and facility usage have been reviewed, and reduced per Council request for the 2012 budget year. This has been reflected in the General fund departmental budgets, providing for approximately $226,000 in budget reductions in the preliminary 2012 budget. Staff is continuing to review this change as well as establishing polices for the creation of Park & Recreation Internal Service Fund as well as re- defining the Governmental Building Internal Service Fund. These items will be brought back to Council as staff continues their review of the calculations specific to the facility and building rental program. Governmental Funds Budget The City is required to certify a proposed budget (expenditures) to the County Auditor by September 15 Unlike the property tax levy, Council may change the amount of the budget higher or lower for the final budget. The resolution includes the Governmental Funds Budget proposed expenditures in the amount of $26,938,627. The budget is not fixed. The comparable number last year was $36,813,470. The decrease reflects the reduction in expenditures from 2011, including the completion of the soon to be constructed Fire Station, several park construction projects and the street reconstruction projects, all of which will be completed in 2011, with no anticipated budget impact for 2012. The 2012 Capital projects will provide for seal coat, overlay and trail extensions. This has resulted in a decrease in the budgeted capital programs in 2012. Debt Service requirements have also been reduced as several debt service issues have been paid off in 2010 and 2011. Budget resolution prel levy 2012 Public Hearing Date The date for the official "Truth in Taxation" pubic hearing on the tax levy and budget is December 6th at the regular Council meeting. A special separate meeting is no longer required. The parcel specific notices will be mailed to property owners later this fall. Alternatives 1. Adopt resolution as drafted. 2. Increase or decrease amounts for tax levy or budget in the resolution. Action Move to set the public hearing date for the 2012 tax levy and budget on December 6, 2011 at 7:00 PM located at City Hall, 129 Holmes Street. Offer Resolution Number 7117, A Resolution Setting Proposed 2011 Tax Levy, Collectable In 2012, and move its adoption. Budget resolution prel levy 2012 RESOLUTION NO. 7117 A RESOLUTION SETTING PROPOSED MAXIMUM 2011 TAX LEVY, COLLECTIBLE IN 2012 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, COUNTY OF SCOTT, MINNESOTA, that the following amounts be levied as the proposed maximum tax levy in accordance with existing law for the current year upon the taxable property in the City of Shakopee; General Levy $14,992,000 Plus Economic Development Authority 80,000 Debt Service - Fire Referendum 130,000 (Market Value) BE IT FURTHER RESOLVED, that the proposed expenditures for the Governmental Funds Budget for 2012 is $26,938,627. BE IT FURTHER RESOLVED, that the public hearing on the tax levy and budget is set for December 6" at 7:00pm, located at City Hall, 129 Holmes St. Adopted in session of the City Council of the City of Shakopee, Minnesota held this day of September, 2011. Mayor of the City of Shakopee ATTEST: City Clerk Budget resolution pre] levy 2012