8. 2018 Tax Levy, Operating Budget, and Capital Budget
Staff Report
Date of Meeting: September 6, 2017
To: City Council
From: Neil Soltis, Administrator
Re: 2018 Tax levy and Operating and Capital budgets
Background: At the August City Council work session a number of changes to the steady state
budget were reviewed and discussed. No decisions were made on those items. The budget
information that follows includes all of those items with the exception of any increase to the
pay grades and rates established by the City’s Compensation Policy which must be annually
confirmed by the City Council through adoption of the budget and resolution establishing the
grades and steps for each job classification. A detailed listings of the assumptions used for the
inflationary changes and to the changes to the steady state budget follows this cover report.
Incorporating all these changes and the other budget assumptions that were discussed at the
August Work Session, the City’s 2018 tax levy would be $2,393,304. This is an increase of
$135,432 (6%) from the 2017 levy. The largest components of the levy increases are the debt
services on the plow truck that replaced the 2002 Sterling, additional funds to provide for part-
time hours for the Fire Chief, and an increase for the levy for the Local Road Improvement
Fund. A listing of these and other major items are detailed below. The decrease in other
components relates to the decrease of $27,000 in funding for the update of the Comprehensive
plan since most of the contract will be completed in 2017.
The property tax levy information includes both 2018 proposed and 2019 projected amounts.
The 2019 Projected Levy amount is provided to show how the levy would change if the
$4,400,000 in debt were to be issued in 2018 to fund the cost of reclaiming and paving the City
roads that are currently rated poor or very poor as recommended by the Capital Improvement
committee.
Issue: Are there changes that should be made to the proposed budget in advance of the Council
approving a resolution to establish the maximum levy rate for 2018.
Proposal Details: The preliminary levy for taxes payable in 2018 must be certified to
Washington County and the date of the public hearing must be set no later than October 2nd.
The recommended property tax levy would be preliminary and would be used for the estimate
of property taxes that would appear on the property tax notices that will be sent out by the
county in November. The Council may make additional changes to the budget prior to its
adoption in December, but the tax levy may not be increased.
Fiscal Impact:
The total levy would increase by 5.8%. The decrease in the levy for the General Fund is
attributable to reallocating $115,000 of funds levied for road maintenance to the Local Road
Improvement Fund and decreasing the amount levied for Planning and Building based on
completing most of the comprehensive plan update work in 2017.
Based on the estimated property values provided by Washington County, the estimated market
value of properties rose from 2017 by $19,827,500 to $642,439,900 with the taxable market
value rising by $17,896,700 to $607,952,500. The resulting tax capacity rose by $203,063
(3.4%) to $6,226,982. As presented the City would levy 38.4% of its tax capacity. When the
City’ levy is spread over the property value, the net result is the levy as presented would be
$3.93 per $1,000 of taxable market value which is an increase of $0.11 per $1,000 over the
Fund 2015 2016 2017
2018
Proposed
2019
Projected
General Fund 1,564,818$ 1,498,148$ 1,543,600$ 1,460,050$ 1,460,050$
Debt Service Fund 272,691$ 148,582$ 116,739$ 152,202$ 559,375$
Capital Improvement Fund 30,000$ 30,000$ 30,000$ -$ -$
Park Capital Improvement -$ -$ -$ 11,000$ 11,000$
Equipment Replacement -$ -$ -$ 30,000$ 30,000$
Local Road Improvement 345,000$ 581,142$ 562,533$ 725,050$ 347,208$
Economic Development Authority 5,000$ -$ 5,000$ 10,800$ 5,000$
Total Levy 2,217,509$ 2,257,872$ 2,257,872$ 2,389,102$ 2,412,632$
Debt Service on Public Works 2017 Plow Truck 35,463$
Fire Department staffing change for Fire Chief hours 33,000$
Local Road Improvement Fund - 5% increase over previous base 29,050$
Public Works - radio equipment 13,200$
Park Improvement Fund - funding source beyond park dedication fees. 11,000$
Economic Development Authority - Tourism development 10,000$
Ordinance Codification - except Land use 8,000$
Reallocate Road Maintenance to Local Road Improvement ($115,000) -$
Other (8,483)$
131,230$
PROPERTY TAX LEVY
MAJOR COMPONENTS OF PROPERTY TAX LEVY CHANGE 2017 - 2018
2017 levy. Based on a residential property with an estimated market value of $250,000 the
City’s levy as presented would increase from $955 for 2017 taxes to $983 for 2018.
2016
Actual
2017
Actual
2017
Budget
2018
Budget
Estimated Market Value $622,802,500 $622,612,400 $623,575,300 $642,439,900
Taxable Market Value $589,914,400 $590,055,800 $590,907,500 $607,952,500
Levy Amount $2,244,336 $2,257,872 $2,257,872 $2,389,102
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
LE
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CHANGES IN MARKET VALUE AND TAX LEVY
2016
Actual
2017
Actual
2017
Budget
2018
Budget
Levy Amount $2,244,336 $2,257,872 $2,257,872 $2,389,102
Levy / $1,000 of taxable market
valuation $3.80 $3.82 $3.82 $3.93
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
LE
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$
1
,
0
0
0
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TAX LEVY TOTAL AND LEVY PER $1,000 OF
TAXABLE MARKET VALUE
See the attached summaries of the preliminary revenue and expenditure budgets for 2018 and
projections of the 12/31/2018 funds balances.
Options:
1. Recommend preparing the levy resolution based on the previous discussion
2. Hold a special meeting to discuss additional changes to the budget and levy amount
Recommendation: Option 1
BUDGET DISCUSSION
COUNCIL WORK SESSION 09/06/17
Pay structure - merit step increases for non-bargaining unit employees -2.0%
Pay structure - bargaining unit employees -3.0%
Mayor & Council wages increase based on Ordinance 156 -0.0%
Health insurance - bargaining unit - estimated -8.0%
Health insurance - non-bargaining unit - per renewal information from insurer -8.0%
PERA contribution rates - no change in rate -0.0%
Social security & medicare - no change in rate -0.0%
Workers Compensation - League range 3-6% increase -6.0%
Assessor - contract + 200 additional building permits @ $10 / -0.0%
League of Minnesota Cities dues increase -0.0%
Property insurance - League range 2 - 3% increase -
Liability Insurance - League 2-6% increase -
Auto damage & liability - League range 3 - 5% increase -
Xcel - electricity --2.0%
Building permits - $60,000 less than 2017 projected, $27,000 less than 2016 actual -30.0%
Contract with Sheriff Department - estimated increase -6.0%
Wage allocations
Administrator - 20% to Planning 20.00%
Public Works Director - 201 Sewer Systems 12.50%
Public Works Director - 5% Uptown Sewer System 5.00%
Public Works staff - 201 Sewer Systems 7.50%
Public Works staff - Uptown Sewer System 3.50%
Public Works staff - Parks Maintenance 1.75%
Public Works staff - Community Building Maintnenance 1.75%
BUDGET ASSUMPTIONS
4.0%
BUDGET DISCUSSION
COUNCIL WORK SESSION - 09/06/17
Levy Impact
REVENUE
Use of Solar Energy Production Tax - city 20% share ($400 / year for each MwH in place)-(1,200)$
Accounting services provided to Lakes Area Cable (1/2 year)-1,800$
EXPENDITURES
ADMINISTRATION
Increase to 4 newsletter per year - printing and postage only -1,500$
Ordinance codification -8,000$
Migrate email from Berry Brothers to GovOffice - 13@ $50 less current cost 500$
Lakes Area Television - withdraw from joint powers agreement 6/30/2018 -(4,300)$
COUNCIL
Council travel & conferences -2,500$
Replace meeting tablets with chromebooks -2,500$
PLANNING - COMPREHENSIVE PLAN UPDATE
Remainder on comprehensive planning agreement -15,000$
FIRE
Increase Fire Chief hours worked and wages -33,000$
PUBLIC WORKS
Moved additional wages to Parks (2,700)$
Moved wages to Community Building -(2,700)$
Tires for grader, tractor & skid loader -3,500$
Radio system annual fee - 4 @ $400 -1,600$
Refurbish signs - 2 welcome to Scandia, Community Building, Fire / Public Works, Warming
house, lighted ballfield - 6 @ $500 - 3,000$
Purchase of radio equipment -13,200$
PARKS
Additional PW wage allocation 2,700$
Utilities for lighted ballfield moved to park improvement fund -(500)$
Refuse disposal for lighted ballfield moved to park improvement fund -(500)$
COMMUNITY BUILDING
Added wages for Public Works maintenance -2,700$
PAY STRUCTURE
Modify base pay from levels established in 2013 - 0.75% increase = $1,200 - ?
EDA
Revolving Loan Fund - transfer balance from the General Fund - no impact on levy -20,000$
Tourism Development - to engage consultant -10,000$
Chisago Lakes Chamber membership -400$
CHANGES FROM STEADY STATE - DOES NOT INCLUDE CAPITAL PROJECTS
2016 Actual 2017 Actual 2017 Budget 2018 Budget
Economic Development Authority $- $5,000 $5,000 $10,800
Local Road Improvement $581,142 $560,533 $562,533 $725,050
Equipment Replacement $- $30,000
Park Capital Improvement $- $11,000
Capital Improvement Fund $30,000 $30,000 $30,000 $-
Debt Service Fund $148,582 $116,000 $116,739 $152,202
General Fund $1,484,612 $1,543,600 $1,543,600 $1,460,050
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
CITY PROPERTY TAX LEVY
2016
Actual
2017
Projec
ted
2017
Budge
t
2018
Budge
t
2019
Budge
t
2020
Budge
t
2021
Budge
t
2022
Budge
t
Debt Service on 2018 Projects $- $- $- $- $408,345 $408,240 $402,780 $405,300
Local Road Improvement Fund $581,142 $560,533 $562,533 $725,050 $347,208 $379,340 $418,429 $451,220
General Fund - Public Works $820,377 $822,500 $822,500 $734,400 $734,400 $734,400 $734,400 $734,400
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
TAX LEVY FOR PUBLIC WORKS AND ROADS
2016 Actual 2017 Projected 2017 Proposed 2018 Budget
Community Center $30,261 $30,200 $30,200 $36,300
Parks & Recreation $48,879 $51,800 $51,800 $52,650
Planning & Building $14,206 $54,000 $54,000 $300
Elections $6,150 $1,300 $1,300 $6,200
City Council $26,976 $18,900 $18,900 $23,500
Administration & Finance $251,468 $275,600 $275,600 $284,300
Police $116,197 $120,500 $120,500 $127,200
Fire $170,098 $168,800 $168,800 $195,200
Public Works $820,377 $822,500 $822,500 $734,400
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
GENERAL FUND TAX LEVY
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Fund balance - 12/31 $1,772,274 $1,362,556 $1,254,074 $1,342,556
Revenue $1,844,078 $1,891,345 $1,823,800 $1,761,650
Expenditures $1,818,391 $2,301,063 $2,342,000 $1,781,650
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
GENERAL FUND SUMMARY
2016 Actual 2017 Projected 2017 Proposed 2018 Budget
Other Financing Sources $- $- $- $-
Other Income and Transfers in $41,358 $34,300 $20,500 $21,500
Fines & Forfeitures $11,792 $9,000 $12,000 $12,000
Charges for Service $65,252 $62,700 $64,100 $61,000
Intergovernmental Services $63,890 $56,900 $57,900 $63,800
Licenses and permits $160,513 $182,845 $101,900 $132,100
Other Taxes $16,661 $2,000 $23,800 $11,200
Property Taxes $1,484,612 $1,543,600 $1,543,600 $1,460,050
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
GENERAL FUND REVENUE SUMMARY
2016 Actual 2017 Projected 2017 Proposed 2018 Budget
Transfers $347,724 $523,200 $523,200 $20,000
Debt Service $- $- $- $-
Capital Outlay $5,197 $4,350 $4,000 $19,900
Contractual Services $805,510 $998,458 $988,100 $869,850
Materials & Supplies $107,476 $156,655 $185,800 $185,700
Personal Service $552,483 $618,400 $640,900 $686,200
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
GENERAL FUND EXPENDITURE SUMMARY BY OBJECT
2016 Actual 2017 Projected 2017 Proposed 2018 Budget
Community Center $37,763 $41,028 $40,200 $46,300
Parks & Recreation $53,008 $61,815 $60,900 $61,850
Public Works $950,744 $1,327,690 $1,371,800 $748,500
Fire $200,280 $204,000 $236,800 $269,800
Police $120,696 $124,300 $120,500 $127,200
Planning & Building $112,602 $185,100 $149,000 $125,300
Elections $5,428 $830 $1,300 $6,200
City Council $17,645 $19,400 $18,900 $23,500
Administration & Finance $320,225 $336,900 $342,600 $373,000
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
GENERAL FUND EXPENDITURE SUMMARY BY DEPARTMENT
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Fund Balance $113,621 $43,794 $37,603 $34,904
Revenue $187,459 $140,386 $130,948 $152,202
Expenditures $187,098 $210,213 $206,981 $161,092
$-
$50,000
$100,000
$150,000
$200,000
$250,000
DEBT SERVICE FUND SUMMARY
Transfer of fund balance for retired debt
Capital Improvement Fund projects recommended by the Capital Improvement Committee
for include ditch-to-ditch improvements on road with PASER ratings of poor and very poor
with surface reclamation and repaving. The following roads are proposed for this work:
Old Marine Trail and 195th St. - east of Olinda Trail
Orwell Avenue - south of 197th
Orwell Court
Oxboro Avenue
Oren Road
199th St.
Parkview Avenue and Parkview Lane
Oldfield Avenue
228th St.
Mallard Avenue
230th St west of Manning
Kirk Avenue
Meadowbrook Avenue
Melanie Trail
Oakhill Road – west of 97
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Fund Balance $374,020 $1,524,453 $1,483,253 $123,003
Revenue $936,870 $1,200,433 $1,163,233 $5,139,750
Expenditures $965,806 $50,000 $54,000 $6,500,000
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
LOCAL ROAD IMPROVEMENT FUND
Capital Improvement Fund projects recommended by the Capital Improvement Committee
for include the following:
Convert community building lighting to LED - $33,000 – to be funded with energy
savings estimated at $5,100 per year
Resurface the Community building tennis courts - $40,000
Emergency Generator for the Fire Department - $66,000 – to be funded with FEMA
hazard mitigation grant for 75% of the cost.
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Fund Balance $384,832 $394,927 $283,132 $310,227
Revenue $31,144 $30,500 $165,000 $54,600
Expenditures $2,370 $20,405 $266,700 $139,300
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
CAPITAL IMPROVEMENT FUND
Equipment Replacement Fund projects recommended by the Capital Improvement
Committee for include the following:
Purchase of a tailgate sander for the Ford F550 truck - $7,000
Replacement of the 2008 Ford Ranger with a Ford F350 - $36,500
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Fund Balance $501,061 $272,929 $302,355 $190,429
Revenue $30,454 $171,000 $239,294 $36,000
Expenditures $- $399,133 $438,000 $118,500
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
EQUIPMENT REPLACEMENT FUND
The only revenue source for the Park Capital Fund beyond the advertising revenues reserved
for the Wayne Erickson lighted ballfield are park dedication fees. These are being used to
repay the interfund loan from the Capital Improvement Fund. The Capital Improvement
Committee recommended that 0.5% of the overall City levy be allocated to the Park Capital
Fund. This amounts to approximately $11,000 per year.
Park Capital Fund projects recommended by the Capital Improvement Committee for include
the following:
Picnic shelter at Lilleskogen Park $15,000 to be funded 75% by donations and grants
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Fund Balance $(11,559) $(7,112) $(12,559) $201,368
Revenue $8,253 $8,450 $33,700 $226,700
Expenditures $- $4,003 $34,700 $18,220
$(50,000)
$-
$50,000
$100,000
$150,000
$200,000
$250,000
PARK CAPITAL FUND
Sale of Olinda Lane lot
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Fund Balance $5,071 $9,746 $9,571 $9,746
Revenue $- $5,000 $5,000 $10,800
Expenditures $325 $325 $500 $10,800
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
ECONOMIC DEVELOPMENT AUTHORITY
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Cash Balance $68,210 $68,595 $73,610 $82,845
Revenue $82,149 $77,900 $77,900 $77,900
Expenditures $110,201 $67,115 $62,000 $63,650
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
201 SEWER FUND
2016 Actual 2017 Projected 2017 Budget 2018 Budget
Cash Balance $2,782 $2,173 $2,743 $(1,266)
Revenue $19,161 $18,000 $18,000 $18,000
Expenditures $21,781 $15,970 $15,400 $15,800
$(5,000)
$-
$5,000
$10,000
$15,000
$20,000
$25,000
UPTOWN SEWER FUND