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Home My WebLink About6.A. Discussion 2005 Tax Levy Impact Co.A, CITY OF SHAKOPEE Memorandum TO: Mayor and Council Mark McNeill, City Administrator FROM: Gregg Voxland, Finance Director SUBJ: 2005 Tax Levy Impact DATE: October 22, 2004 During Council's discussion of the 2005 budget and tax levy, three items that they may wish to review are as follows; 1.) Reliance on. development fees to fund operation - At what level does Council want to rely on development fees to fund operations and at what rate does Council want to achieve that level? 2001 reliance was 33%, 2002 was 23%, 2003 was 18% as is 2004. 2005 is currently at 14% and if Council cut back on the decrease to 15% it would add about $170,000 to revenues. Based on formation from other cities that have gone through the rapid growth years before Shakopee, the reliance should be less than 10% but Council has not set a specific number yet. The average reliance on development fees for Maple Grove, Eagan, Apple Valley and Woodbury is 8%, with a range of 5 to 15%. 2. ) Budget under-spend factor - At what level does Council want to rely on under-spending the budget? The current status of the General Fund budget has a deficit (use of fund balance) of 2% representing .that the city will not spend more than 98% of the budget. Recent years actual under-spend results are: 1999 4%, 2000 5%, 2001 8%, 2002 8% and 2003 8l!- a. Increasing the budget deficit from 2% to 3% provides $130,000. 3. ) Fund balance level - What does Council want for a General Fund fund balance amount? Council several years ago adopted a range of 25 to 35 percent of the following year's budget for expenditures and transfers out as the desired level of General Fund fund balance. The State Auditor (not the state) recently stated that 50% is an acceptable level. Moody's likes to see the higher levels. The December 31, 2003 level was 44%. Fund balance is used for cash flow (when expenditures exceed revenues at any particular point in time), to save for a future designated larger expenditure and to offset possible revenue cuts/decreases (state cuts market value credit). If Council chooses to use fund balance to pay for items in the 2005 General Fund budget, it should be used for "one time" items like the 2nd Ave. streetscape renewal $10,000, civil defense sirens $39,000, Tahpah well $22,500, Tahpah sunscreen $8,500, entrance monuments $25.555, etc. . 4. ) Tax Rate - Does Council want to have a target tax rate? Council's goal #2 is to ensure the City's financial stability with action step #1 is adopting the 2005 budget maintaining a stable tax rate. The 2004 tax rate is 32.433 and the proposed 2005 rate is 32.332 based on the maximum tax levy certified to the County Auditor last month. The 10/21/04 estimated tax rate for 2005 is 32.332 as per the TNT notice/County Auditor (attachment A) . The average proposed city rate for 2005 in Scott County is 47.6536 (attachment B) . The 2004 tax rate for Shakopee rate is 32.433. The average of 22 other cities is 35.209. See attachment C for breakdown. S. ) Expenditure reductions - Are there specific programs or service levels that Council wants to reduce? If there are areas or programs in which Council wants to reduce expenditures, it is suggested that Council give staff directions as to amount to reduce and the program areas affected and let staff return with recommendations. Just as examples, a program would be pavement maintenance $40,000, or; Recreation fee increases $32,500 (ice, memberships, adult programming), the number of pool lifeguards $10,000, delay police hiring to mid- year $60,000, public works seasonal staffing $14,000, engineering seasonal and professional services $20,000. A Notice of Proposed Total Budget and Property Taxes The Shakopee City Council will hold a public hearing on its budget and on the amount of the property taxes it is proposing to collect to pay for the costs of services the City will provide in 2005. SPENDING: The total budget amounts below compare the City's 2004 total actual budget with the amount the City proposes to spend in 2005. Change from 2004 . 2005 #DIV/O! TAXES: The property tax amounts below compare that portion of the current budget levied in property taxes in the City of Shakopee for 2004 with the property taxes the City proposes to collect in 2005. 2004 Proposed 2005 Change from Property Taxes Property Taxes 2004 . 2005 $ 8,340,471 $ 9,848,526 18.081 % LOCAL TAX RATE COMPARISON: The following compares the City's current local tax rate, the City's tax rate for 2004 if no tax levy increase is adopted, and the City's proposed tax rate for 2004. 2004 2005 Tax Rate if 2005 Proposed Tax Rate NO Levy Increase Tax Rate 32.433% 27.152% 32.332% Attend the Public Hearing AIIShakopee residents are invited to attend the public hearing of the City Council to express their opinions on the budget and on the proposed amount of 2005 property taxes. The hearing will be held on: Monday, December 6 at 7:00 PM Shakopee City Hall 129 Holmes St S Shakopee, MN 55379 You are also invited to send your written comments to: Shako pee City Council 129 Holmes St S Shakopee, MN 55379 B NET TAX CAPACITIES & RATES FOR PAYABLE 2005 - PROPOSED COUNTY OF SCOTT, MINNESOTA Belle Plaine 3,640,484 60.8210 Burnsville 10,868,776 17.6840 0.16742 Elko 908,142 59.1280 wfCross County n/a Jordan 2,769,076 58.7330 Lakeville 7,933,718 21.9850 0.17347 New Market 1,211,420 33.2710 wfCross County n/a New Prague 2,588,955 57.2450 0.01882 Bloomington 53,115 16.7450 0.11607 w/Cross County 4,014,926 wfCross County n/a Prior Lake 18,314,285 32.4640 0.04366 Belle Plaine 4,931,073 12.6650 0.00181 Savage 20,829,730 47.0590 0.02018 wfCross County 6,196,189 Shakopee 28,160,658 32.5080 0.00964 Jordan 6,933,866 30.3800 0.05487 A\Jj 611. f4S".3/P Prior Lake 32,038,243 27.0600 0.16802 Shakopee 26,664,043 21.5170 0.11927 New Prague 8,953,985 21.7330 0.08965 wfCross County 13,692,811 42,186 16.8950 0.06948 25,680 7.7840 0.06948 Belle Plaine 1,012,248 9.8280 BP Fire/Amb 774,773 4.8800 NP Fire/Amb 223,020 . 1.8490 Blakeley 549,772 18.6940 Shak-EDA 28,160,658 0.0650 Cedar Lake 3,057,514 10.6090 Scott Co HRA 103,438,455 1.4050 NP Fire 2,131,238 1.5450 Met Council 100,849,500 0.9910 NM Fire 926,276 2.0090 Mosq Control 103,438,455 0.5320 Credit River 5,534,826 8.4110 Met Transit Helena 1,752,808 10.0650 District-Bond 67,366,640 1.3320 JON Fire 449,447 6.2170 LW MN Water 25,325,209 0.3250 NP Fire/Amb 1,303,361 1.6460 PUSL Water 22,297,630 2.9700 Jackson 919,255 9.7520 CL Improve 791,889 0.6310 Louisville 1,510,451 4.1570 Region 9 Dev 2,588,955 0.2280 New Market 4,185,871 3.7670 CL Area S&W 659,4 72 2.6870 Sand Creek 1,702,655 15.4530 St Lawrence 576,604 22.2950 BP Fire/Amb 193,989 7.8740 JON Fire/Amb 382,615 4.8370 Spring Lake 4,151,734 12.7090 Scott 103,438,455 35.2760 WMO 51,053,483 1.2050 Vermillion WMO 4,762,133 0.3010 *** NOTES *** TAX CAPACITY VALUES ARE THE TAXABLE VALUES TAKEN FROM THE COUNTY TABLE X REPORT FOR TOTAL RATE ADD: COUNTY, CITY OR TWP, SCHOOL, FIRE & SPECIAL TAXING DISTRICTS THAT APPLY AREA WIDE FISCAL DISPARITY RATE: 137.1070 STATE TAX RATE 54.1090 C- Tax Capacity Rate Comparison City of Shakopee, Minnesota Tax Capacity Rates (Predominant District) Payable 2004 City School County County City Rate Rate Rate Misc. Total Scott Shakopee 32.43 21.42 36.63 5.35 95.83 Savage 51.40 25.26 36.63 6.08 119.37 Prior Lake 34.44 32.33 36.63 7.79 111.19 Jordan 54.18 30.43 36.57 4.12 125.30 Carver Chaska 19.23 37.52 48.44 5.65 110.84 Chanhassen 32.88 31.76 48.41 5.87 118.92 Hennepin Plymouth 23.18 25.01 47.32 9.00 104.51 Eden Prairie 32.94 17.30 47.32 8.32 105.88 Minnetonka 29.91 22.40 47.32 8.42 108.05 Brooklyn Center 52.44 30.79 47.32 8.74 139.29 Dakota Burnsville 38.93 21.45 30.30 6.13 96.81 Eagan 28.70 22.14 30.30 4.93 86.07 Apple Valley 39.61 25.99 30.30 5.10 101.00 Lakeville 30.05 27.46 30.30 3.47 91.28 Ramsey New Brighton 35.80 21.94 53.14 5.45 116.33 Roseville 23.83 16.63 53.13 5.67 99.26 Mounds View 42.55 21.93 53.14 7.09 124.71 Anoka Fridley 30.32 22.38 35.76 8.18 96.64 Columbia Hgts. 47.89 22.92 33.27 5.97 110.05 Washington Lake Elmo 19.32 19.98 31.20 7.14 77.64 Woodbury 31.01 28.76 31.20 6.39 97.36 Cottage Grove 43.56 31.24 31.20 5.34 111.34 --------------- --------------- --------------- -.------------- ---------------- Average 35.209 25.320 39.810 6.373 106.712 -------- -------- -------- -------- --------- -------- -------- -------- -------- --------- 0 Tax Capacity Rate Comparison City of Shako pee, Minnesota Tax Capacity Rates Comparison of City Rates County City 1999 2000 2001 2002 2003 Scott Shakopee 23.300 20.132 18.200 33.976 33.940 Savage 26.990 27.386 26.560 42.741 46.530 Prior Lake 34.060 32.521 26.410 39.892 38.610 Jordan 42.670 46.309 50.640 60.684 60.600 Carver Chaska 16.500 17.010 16.140 19.837 19.700 Chanhassen 31.080 32.040 28.930 37.823 38.990 Hennepin Plymouth 14.890 14.930 13.990 23.889 23.460 Eden Prairie 28.530 29.020 27.150 37.611 35.190 Minnetonka 20.050 20.050 18.020 30.995 30.980 Brooklyn Center 36.270 36.270 36.050 57.705 52.790 Dakota Burnsville 29.550 30.010 29.200 43.296 41.070 Eagan 24.690 25.310 23.450 31.715 29.920 Apple Valley 32.290 34.010 31.320 45.942 41.580 Lakeville 19.120 18.730 20.080 34.545 32.940 Ramsey New Brighton 20.280 21.470 20.400 38.880 35.850 Roseville 20.000 20.820 18.520 29.414 25.730 Moundsview 26.860 26.420 29.570 0.000 37.920 , Anoka Fridley 18.400 18.870 16.410 30.727 28.690 Columbia Hgts. 31.930 33.020 30.560 49.114 45.270 Washington Lake Elmo 20.310 21.790 18.450 25.665 22.740 Woodbury 22.830 23.450 21.980 34.304 33.410 Cottage Grove 29.330 31.020 27.340 47.517 41.990 Average 25.906 26.390 24.971 36.194 36.268 (22 cities)