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6. Discussion on 2019 Operating and Capital budgetsSC DILA Staff Report Date of Meeting: August 1, 2018 To: City Council From: Neil Soltis, Administrator Re: 2019 Operating and Capital budgets Background: The proposed 2019 budget information provided is based on a series of assumptions that reflect known or anticipated changes to the levels of services provided for in the 2018 budget and information submitted by the Departments. These changes are based on projected inflation, historical spending patterns, and information provided by outside sources regarding charge or rate increases. A listing of those assumptions and other changes that are reflected in the financial information follow the financial information. Based on these inflationary increases and minor adjustments to departmental expenditures, the 2019 General Fund expenditures (net of any transfers) would be $1,667,200 which is $95,900 less than the 2018 budget. The tax levy needed to support these levels of service provided by the General Fund would be $1,375,800 which is $29,480 greater than the amount levied for 2018. The levy for all funds, which includes debt service and the Local Road Improvement Fund, would be $2,291,080 which is $36,708 (1.63%) greater than the 2018 levy. This is a starting point for the budget discussions. The goals in order to move forward with the budget are the following: 1. Discuss any changes that should be made to the assumptions 2. Discuss any changes that should be made to the changes proposed by staff 3. Discuss any changes that should be made to the current levels of service provided 4. Discuss other changes to the programs, activities, or services provided 5. Discuss changes to expenditures from the Capital Funds proposed by staff or Committees. Based on this discussion and information that is not currently available, the budgetary information will be recast for further discussion at the September work session. At the September City Council meeting, action will need to be taken by the Council to set the maximum levy amount for taxes to be collected in 2019. BUDGET DISCUSSION COUNCIL WORK SESSION - 08/01/2018 Total by Department $ 1,818,391 $ 2,210,975 $ 2,163,100 $ 1,667,200 GENERAL FUND REVENUE SUMMARY Account 2016 Actual Account 2017 Actual 2016 Actual 2018 Budget 2017 Actual 2019 Budget 2018 Budget Personal Service 2019 Budget Property Taxes $ 1,484,612 $ 1,531,749 $ 1,346,320 $ 1,375,800 Other Taxes $ 16,661 $ 18,431 $ 13,200 $ 13,200 Licenses and permits $ 160,513 $ 366,902 $ 132,600 $ 132,600 Intergovernmental Services $ 63,890 $ 115,107 $ 63,800 $ 70,200 Charges for Service $ 65,252 $ 63,915 $ 60,900 $ 63,200 Fines & Forfeitures $ 11,792 $ 8,415 $ 12,000 $ 10,000 Other Income and Transfers in $ 41,358 $ 49,637 $ 15,800 $ 8,000 Total by Object $ 1,844,078 $ 2,154,157 $ 1,644,620 $ 1,673,000 Total by Department $ 1,818,391 $ 2,210,975 $ 2,163,100 $ 1,667,200 GENERAL FUND EXPENDITURE SUMMARY BY OBJECT Account 2016 Actual 2016 Actual 2017 Actual 2017 Actual 2018 Budget 2018 Budget 2019 Budget 2019 Budget Personal Service $ 552,483 $ 605,052 $ 690,300 $ 709,500 Materials & Supplies $ 107,476 $ 116,452 $ 184,900 $ 173,900 Contractual Services $ 805,510 $ 938,605 $ 857,900 $ 777,400 Capital Outlay $ 5,197 $ 27,666 $ 6,500 $ 3,400 Transfers $ 347,724 $ 523,200 $ 423,500 $ 3,000 Total by Object $ 1,818,391 $ 2,210,975 $ 2,163,100 $ 1,667,200 Total by Department $ 1,818,391 $ 2,210,975 $ 2,163,100 $ 1,667,200 GENERAL FUND EXPENDITURE SUMMARY BY DEPARTMENT Account 2016 Actual 2017 Actual 2018 Budget 2019 Budget Administration & Finance $ 320,225 $ 331,274 $ 344,000 $ 324,300 City Council $ 17,645 $ 19,291 $ 19,500 $ 20,400 Elections $ 5,428 $ 1,765 $ 6,200 $ 2,200 Planning & Building $ 112,602 $ 213,887 $ 126,300 $ 119,200 Police $ 120,696 $ 128,656 $ 127,200 $ 134,300 Fire $ 200,280 $ 213,208 $ 271,500 $ 259,200 Public Works $ 603,020 $ 679,904 $ 730,500 $ 685,400 Parks & Recreation $ 53,008 $ 63,411 $ 69,300 $ 74,200 Community Center $ 37,763 $ 36,380 $ 45,100 $ 45,000 Transfer $ 347,724 $ 523,200 $ 423,500 $ 3,000 Total by Department $ 1,818,391 $ 2,210,975 $ 2,163,100 $ 1,667,200 BUDGET DISCUSSION COUNCIL WORK SESSION - 08/01/2018 TAX LEVY Fund 2016 Actual 2017 Actual 2018 Budget 2019 General Fund $ 1,484,612 $ 1,531,749 $ 1,346,320 $ 1,375,800 Debt Service Fund $ 148,582 $ 116,739 $ 152,202 $ 564,100 Capital Improvement Fund $ 30,000 $ 30,000 $ - $ - Equipment Replacement $ - $ - $ 30,000 $ 30,000 Local Road Improvement $ 581,142 $ 560,533 $ 725,050 $ 316,180 Economic Development Authority $ - $ 5,000 $ 800 $ 5,000 Total Levy $ 2,244,336 $ 2,244,021 $ 2,254,372 $ 2,291,080 $ 3.80 $ 3.80 $ 3.71 $ Levy Calculation 2016 Actual 2017 Actual 2018 Budget 2019 Budget Estimated Market Value Taxable Market Value Levy Capacity Taxable value Levy Amount Fiscal disparity Localtaxlevy % of capacity levied tax rate Levy / $1,000 of taxable market valuation $ 622,802,500 $ 622,612,400 $ 642,439,900 $ 687,795,100 $ 589,914,400 $ 590,055,800 $ 607,952,500 $ 655,195,300 $ 6,029,832 $ 6,023,919 $ 6,226,982 $ 6,735,177 $ 5,873,543 $ 5,864,023 $ 6,091,001 $ 6,599,196 $ 2,244,336 $ 2,257,872 $ 2,254,372 $ 2,291,080 $ (155,098) $ (159,896) $ (135,981) $ (135,981) $ 2,089,238 $ 2,097,976 $ 2,118,391 $ 2,155,099 37.22% 37.48% 36.20% 34.02% 35.57% 35.78% 34.78% 32.66% $ 3.80 $ 3.80 $ 3.71 $ 3.50 BUDGET DISCUSSION COUNCIL WORK SESSION 08/01/18 BUDGET ASSUMPTIONS PERSONAL SERVICE Pay structure - merit step increases for non -bargaining unit employees - 2.00% Pay structure - bargaining unit employees - 2.75% Mayor & Council wages increase based on Ordinance 156 - 5.2% Health insurance - bargaining unit - estimated - 10.0% Health insurance - non -bargaining unit - per renewal information from insurer - 21.0% 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% Wage allocations Administrator - 20% to Planning 20.00% Public Works Director - 201 Sewer Systems 12.50% Public Works Director - 5% Uptown Sewer System 4.00% Wage allocation estimates Public Works staff - Parks Maintenance Public Works staff - Community Building Maintnenance Public Works staff - Uptown Sewer System PT Parks - 20% to Park Improvement fund for lighted ballfield maintenance Public Works staff - 201 Sewer Systems CONTRACTUAL SERVICES League of Minnesota Cities dues increase Property insurance - League range 2 - 3% increase Liability Insurance - League 2-6% increase Auto damage & liability - League range 3 - 5% increase Xcel - electricity - Contract with Sheriff Department - estimated increase Building Permit fees - 45% of Building permit revenues REVENUES Building permits - $130,000 less than 2018 projected, $254,000 less than 2017 actual 7.50% 3.00% 3.00% 20.00% 5.50% 0.0% 4.0% 2.0% 6.0% - 0.0% BUDGET DISCUSSION COUNCIL WORK SESSION - 08/01/18 2018 2019 CHANGE GENERAL FUND CHANGES FOR DISCUSSION CHANGES FROM STAFF REFLECTED IN THE BUDGET AS PRESENTED REVENUE No cable franchise fees to General Fund Lakes Area Television accounting services Fines and Forfeitures EXPENDITURES ADMINISTRATION Lakes Area Television - withdraw from joint powers agreement 6/30/2018 No transfer of fund balance to EDA ELECTIONS Off year election cycle PLANNING - COMPREHENSIVE PLAN UPDATE Planner - Code changes based on Comprehensive Plan Remainder on comprehensive planning agreement ($43,000 in 2017) FIRE PUBLIC WORKS Allowance for fuel cost increase (2016/2017 actual $10,809 / $13,833) Decreased salt usage (2016/2017 actual $20,368 / $22,784) Road Maintenance supplies (2016/2017 actual $16,561 / $15,930) Contractual Road Maintnenance & Repair PARKS Additional PW & Seasonal wages COMMUNITY BUILDING Added wages for Public Works maintenance GROUP HOSPITALIZATION INSURANCE - $ 6,000 $ - $ (6,000) - $ 1,800 $ 3,600 $ 1,800 - $ 12,000 $ 10,000 $ (2,000) - $ 5,300 $ - $ (5,300) - $ 20,000 $ - $ (20,000) - 6200 $ 2,200 $ (4,000) - $ 25,000 $ 30,000 $ 5,000 - $ 15,000 $ 2,000 $ (13,000) - $ 20,000 $ 26,000 $ 6,000 - $ 40,000 $ 32,000 $ (8,000) - $ 30,000 $ 25,000 $ (5,000) - $ 215,000 $ 140,000 $ (75,000) - $ 11,500 $ 14,000 $ 2,500 - $ 2,400 $ 4,800 $ 2,400 - $ 84,100 $ 93,200 $ 9,100 BUDGET DISCUSSION COUNCIL WORK SESSION - 08/01/18 2018 2019 CHANGE CHANGES THAT ARE NOT REFLECTED IN THE BUDGET AS PRESENTED COUNCIL Codify City Ordinances - $ - $ 10,000 $ 10,000 Replace meeting tablets as needed $ - $ 600 $ 600 PUBLIC WORKS Computer replacement PARKS Additional Senior and Youth programming Path & culvert to T -ball field Buckthorn control @ Lilleskogen Aquatic Invasive species boat inspections ($3,500 in 2018) $ - $ 2,000 $ 2,000 - $ - $ 3,500 $ 3,500 $ - $ 5,000 $ 5,000 - $ 3,500 $ 3,500 $ - BUDGET DISCUSSION COUNCIL WORK SESSION - 08/01/18 2018 2019 CHANGE CAPITAL FUNDS CHANGES FROM 2018 - 2022 CAPITAL IMPROVEMENT PLAN CAPITAL IMPROVEMENT FUND Bliss Addition Stormwater Plan - 100% of cost to be partially offset by Watershed District - $ - $ 30,000 $ 30,000 Fire Department - LED lighting - would be offset by savings in the General Fund - $ - $ 30,000 $ 30,000 PARK CAPITAL IMPROVEMENT FUND Lilleskogen - wetland restoration - $ - $ 10,000 $ 10,000 Concrete slabs under bleachers - $ - $ 10,000 $ 10,000 Path from t -ball field to community building / pleasure rink expansion - $ - $ 10,000 $ 10,000 Clearing and trails at nature parks (Bone Lake, Big Marine School site, Orwell Court) - $ - $ 10,000 $ 10,000 Settlers monument improvements - $ - $ 5,000 $ 5,000 Doors for pavilion and water source at Lions Park - $ - $ 15,000 $ 15,000 LOCAL ROAD IM[PROVEMENT FUND Engineering for 2020 Road Improvement projects - $ - $ 50,000 $ 50,000 CAPITAL IMPROVEMENTS (FUND 401) 2016 2017 2018 2018 2019 Actual Actual Projected Budget Proposed FUND BALANCE Revenue $ 31,144 $ 32,412 $ 443,500 $ 456,000 $ 26,500 6,000 Advance from (to) 201 Sewer Fund $ 2,639 $ 2,639 $ 2,639 $ 2,639 Expenditures $ 2,370 $ 13,642 $ 193,635 $ 253,650 $ 127,000 Information Technology Net Revenues (Expenditures) $ 28,774 $ 18,770 $ 249,865 $ 202,350 $ (100,500) $ 476,339 800 Server $ 5,300 Balance January 1 $ 356,058 $ 384,832 $ 403,602 $ 403,602 $ 605,952 Community Building Balance December 31 $ 384,832 $ 403,602 $ 653,467 $ 605,952 $ 505,452 Interfund Loan from (to) Park Capital Fund EXPENDITURES BY DEPARTMENT $ 6,000 $ 9,000 $ 9,000 $ 6,000 $ 6,000 Advance from (to) 201 Sewer Fund $ 2,639 $ 2,639 $ 2,639 $ 2,639 $ 2,639 $ 30,000 Information Technology CASH BALANCE 12/31 $ 326,802 $ 357,211 $ 618,715 $ 568,200 $ 476,339 EXPENDITURES BY DEPARTMENT General Hoiday decorations $ 6,000 $ 6,000 Bliss Additional Stormwater plan $ 30,000 Information Technology Firewall appliance $ 1,300 Gigabit ethernet switch $ 800 Server $ 5,300 Broadband Feasibility Study $ 9,350 $ 9,350 Community Building Building lighting conversion to LED $ 33,285 $ 33,300 Skateboard ramps $ 12,000 Tennis court resurfacing $ 45,000 $ 45,000 Fire Emergency Generator $ - $ 66,000 Roof replacement $ 100,000 HVAC replacement $ 15,000 LED lighting improvements $ 30,000 Parks South Ballfield backstop $ 6,335 Log House Landing Boat ramp $ 2,370 $ - $ - 205th Street - bound aggregate improvement $ 2,370 $ 13,735 $ 93,635 $ 153,650 $ 157,000 PARK CAPITAL IMPROVEMENTS (FUND 404) 2016 2017 2018 2018 2019 Account Description Actual Actual Projected Budget Proposed FUND BALANCE Revenue $ 8,253 $ 5,582 $ 248,919 $ 315,700 $ 8,200 Designated - Lilliskogen $ (24,907) $ (21,407) $ (14,688) $ (22,907) $ (18,688) Expenditures $ - $ 3,768 $ 102,450 $ 118,220 $ 63,240 Designated - Skating Rink $ - $ - $ - $ - Net Revenues (Expenditures) $ 8,253 $ 1,814 $ 146,469 $ 197,480 $ (55,040) Balance January 1 $ (19,812) $ (11,559) $ (9,745) $ (9,745) $ 136,724 Balance December 31 $ (11,559) $ (9,745) $ 136,724 $ 187,735 $ 81,684 Advance from (to) Capital Improvement fund 1 $ (6,000) $ (3,000)T$ (6,000) $ (6,000) $ CASH BALANCE 12/31 $ 17,4411 $ 16,255 1 $ 156,724 1 $ 207,735 1 $ 95,684 Balance by sub -fund Undesignated $ (1,777) $ (1,645) $ 138,355 $ 198,356 $ 98,356 Designated - Lilliskogen $ (24,907) $ (21,407) $ (14,688) $ (22,907) $ (18,688) Designated - Wayne Erickson $ 15,125 $ 13,307 $ 13,057 $ 12,287 $ 3,057 Designated - Skating Rink $ - $ - $ - $ - $ (11,559) $ (9,745)1 $ 136,724 1 $ 187,735 1 $ 82,724 Balance due to Capital Improvement Fund $ 29,000 $ 26,000 $ 20,000 $ 20,000 $ 14,000 IMPROVEMENTS BY LOCATION Lilleskogen - to be 100% funded through grants & donations Parking lot Picnic shelter $ - $ - $ - $ 15,000 Lilleskogen - wetland restoration $ 10,000 $ - $ - $ - $ 15,000 $ 10,000 Wayne Erickson - to be funded through advertising revenues Bleacher/ Concession improvements Concrete slabs under bleachers Undesignated Path from t -ball field to community bi Clearing and trails at nature parks (Bone Lake, Big Marine School site, Orwell Court) Settlers monument improvements Doors for pavilion and water source a $ - $ 3,169 $ - $ - $ 10,000 $ - $ 3,169 $ - $ - $ 10,000 ilding / pleasure rink expansion $ 10,000 $ 10,000 $ 5,000 Lions Park $ 15,000 $ - $ - $ - $ 40,000 Account Description Revenue EQUIPMENT REPLACEMENT (FUND 406) 2016 2017 2018 2018 2019 Actual Actual Projected Budget Proposed FUND BALANCE SUMMARY 30.454 1 S 171.834 1 S 40.540 Expenditures $ - 1 $ 195,093 1 $ 155,961 1 $ 145,500 1 $ 43,000 1 Net Revenues (Expenditures) $ 30,454 1 $ (23,259) $ (115,421) $ (84,960)1 $ 18,000 Balance January 1 $ 470,608 $ 501,061 $ 477,802 $ 477,802 $ 392,842 Balance December 31 $ 501,061 $ 477,802 $ 362,382 $ 392,842 $ 410,842 EXPENDITURES BY DEPARTMENT Public Works Replace 2002 Sterling dump truck & plow $ 155,961 Replace 2009 John Deere 1445 mower w broom & blower $ 32,500 Purchased used roller ; $ 6,633 ; ; Replace 2008 Ford F350 +plow ; ; ; ; ; $ 43,000 ; Tailgate sander - Ford F550 $ 6,100 , $ 7,000 , Replace 2008 Ford Ranger i i i i$ 36,500 Fire SCBA & Masks $ $ 106,918 ; $ 107,540 SCBA Air Compressor $ $ - $ 17,000 Replace 1995 Ford - Grass Rig #5175 $ $ 90,470 $ 85,000 Radio replacement I ; $ 75,000 Replace 2003 Peterbuilt Tanker - I I I I I #5178 ' Replace engine on 2000 Pumper truck - #5176 ' Thermal Imaging Camera $ $ Community Center Zamboni replacement I I I I I $ - $ 195,093 $ 203,488 $ 253,040 $ 118,000 LOCAL ROAD IMPROVEMENT (FUND 408) 2016 2017 2018 2018 2019 Description Actual Actual Projected Budget Proposed FUND BALANCE SUMMARY 317,180 $ 965,806 ; $ 88,753 ; $ 5,117,965 ; $ 6,500,000 ; $ 50,000 ; $ (28,936)1 $ 1,081,016 j $ (522,994) $ (1,360,250)1 $ 267,180 1 $ 402,956 I $ 374,020 I $ 11455,036 I $ 1,477,853 I $ 932,042 1 $ 374,020 1 $ 1,455,036 1 $ 932,042 1 $ 117,603 1 $ 1,199,222 1 EXPENDITURES Engineering Services , $ , $ 88,753 , $ 350,000 , $ 50,000 , $ 50,000 , Debt issuance costs $ $ - $ 42,965 i $ - i $ i $ $ 88,753 $ 392,965 $ 50,000 $ 50,000 Capital Improvements other than Bldgs 1 $ 965,806 1 $ $ 4,725,000 1 $ 6,450,000 1 $ $ 965,806 ; $ ; $ 4,725,000 ; $ 6,450,000 ; $ ; $ 965,806 : $ 88,753 : $ 5,117,965 $ 6,500,000 : $ 50,000 Description 2016 Actual 2017 Actual 2018 Proj. 2018 Budget 2019 Budget Base $ 581,142 i $ 560,533 i $ 725,050 i $ 581,000 i $ 610,050 Increase in base $ - $ - $ - $ 29,050 $ - Sealcoat funds from General Fund I $ $ $ $ 115,000 $ 115,000 Debt Service on bonds ' $ - ; $ - ; $ - ; $ - ; $ (408,870) ; $ 581,142 $ 560,533 $ 725,050 $ 725,050 $ 316,180