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9-21-2021 Budget Workshop Presentation2022 Budget/Levy Discussion September 21, 2021–City Council Budget Workshop Tonight’s Discussion will focus on: •The Preliminary 2022 Levy •The Estimated Preliminary Tax Rate •Review of 2022 Projected Fund Balance •Review of General Fund Budget Highlights •Review of 2022 Capital Expenditures •Sewer Utility Budgets for Big Marine Lake Utility and the Uptown Utility to be Presented to the Sewer Committee September 30th at 7PM What is city’s tax levy vs. the city’s tax rate? Tax rate is calculated by distributed the City’s total taxes needed over the City’s total taxable value. Different types of property have a different classification rate set by the state. What are other impact on property tax bills? •The changes to City’s tax rate are applied to local property tax bills along with other taxing jurisdictions which include: •The State of Minnesota •Washington County •Your Local School District •Your Local watershed district. •The Metropolitan Council •And others…like Washington County Community Development Authority and mosquito control •Your property tax bills will also be affected by: •The levies set by the other above jurisdictions •Changes in your property valuations made by the Council and City assessor •Changes in state property tax classifications •Homestead Market Value Exclusion Proposed 2022 Preliminary Tax Levy and Estimated Tax Rate Rate STATEMENT OF LEVIES -ALL FUNDS ACTUAL FOR YEAR ENDED DECEMBER 31, 2019 AND 2020, BUDGET FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2022 Actual Budget Fund #Description 12/31/2019 12/31/2020 2021 2022 101 -General Fund $1,342,592 $1,484,700 $1,381,700 $1,583,000 225 -Economic Development Authority Fund $5,000 $5,000 $5,000 $8,000 313 -2013 Certificates $68,816 $72,831 $68,220 $67,000 315 -2015 Certificates $48,996 $45,670 317 -2017 Certificates $37,418 $36,695 $35,909 $34,524 318 -2018 GO Bonds $346,120 $343,534 $341,456 $344,531 401 -General Capital Improvement Fund $100,000 $141,860 404 -Park Improvement Fund $30,000 $10,000 $20,000 406 -Equipment Replacement Fund $30,000 $30,000 $130,000 $87,800 408 -Local Road Improvement Fund $378,930 $381,516 $438,539 $292,336 TOTAL CITY LEVY $2,257,872 $2,429,946 $2,510,824 $2,579,051 Change in Levy From PY -12.67%-0.54%10.58%2.68% Less Fiscal Disparities $(132,815.00)$(133,843.00)$(122,427.11)$(125,306.85) Total Net Tax Levy $2,125,057 $2,296,103 $2,388,397 $2,452,744 Total Net Tax Capacity $6,723,403 $7,460,384 $7,911,011 $8,140,985 TAX RATE*31.607%30.777%30.191%30.128% Projected change in Rate -7.8331%-2.6247%-0.5865%-0.0624% * Tax Rate for 2022 is an estimate based on an estimated total net tax capacity. Projected 2022 General Fund Revenues Property Tax Levy 83% Other Taxes 1% Special assessments 0% Intergovernmental revenue 3% Licenses and permits 8% Charges for services 3% Fines & Forfeitures 0%Interest earnings 1% Refunds and reimbursements 0% Donations 0% Grants 1% Miscellaneous revenue 0% Transfers from Other funds 0% Projected 2022 General Fund Revenue Summary Budget Percent 2021 Proposed 2022 Change Property Tax Levy $ 1,381,700 $ 1,583,000 15% Other Taxes $ 17,000 $ 25,400 49% Special assessments $ -$ -0% Intergovernmental revenue $ 62,900 $ 64,200 2% Licenses and permits $ 108,400 $ 149,500 38% Charges for services $ 60,200 $ 51,200 -15% Fines & Forfeitures $ 8,100 $ 7,000 -14% Interest earnings $ 17,900 $ 15,900 -11% Refunds and reimbursements $ 500 $ 2,500 400% Donations $ 5,000 $ 1,500 -70% Grants $ 12,000 $ 10,000 -17% Miscellaneous revenue $ 1,400 $ 2,000 43% Transfers from Other funds $ 1,440 $ --100% Total Revenue 294,840 329,200 12% 2021 Budgeted General Expenditures General Government 32% Public Safety 23% Public Works 36% Capital Outlay 1% Culture and Recreation 8% Transfers to other funds 0% Proposed 2022 General Fund Expenditures PROJECTED GENERAL EXPENDITURES Budget Percent 2021 Proposed 2022 Change General Government $ 547,934 $ 617,820 13% Public Safety $ 412,238 $ 435,090 6% Public Works $ 658,253 $ 683,490 4% Capital Outlay $ 14,400 $ 16,000 11% Culture and Recreation $ 144,897 $ 152,900 6% Transfers to other funds $ 280,000 $ --100% Total Expenditures 2,057,722 1,905,300 -7% How does the general fund balance fit in this discussion? •The City’s general fund balance or “reserves” serve a critical purpose of cash flowing the City’s financial activity. Since the City is revenue is mostly property tax dependent, the city only receives the necessary funding it needs to operate when taxes are settled in July and December. This means cash balances are necessary to “float” expenses during the lean months of June and November when the City’s cash balances are at their lowest. •The Fund Balance report your packets and the next slide represents the City’s attempt to comply with its policy of maintaining a fund balance of at least 50% of the year’s budgetary expense. (This report current reflex preliminary budget or Option A.) •When a budget is not balanced, meaning expenses do not match revenues, this can either draw upon the funds that we keep in the fund or build on them. •A strong fund balance can also help the City obtain lower cost debt and allows for a contingency for unexpected emergencies or unanticipated changes in yearly expenses. Having appropriate funds on reserve demonstrate to bond rating agencies, and ultimately potential bond holders, that the City exercises financial responsibility and has the means to pay its debt obligations of unexpected circumstances arise. Projected 2022 General Fund Balance Year Fund Balance December 31 General Fund Budget Percent of Fund Balance to Budget 2013 Actual $ 1,594,415 $ 1,932,639 2014 Actual $ 1,715,890 1,938,998 88.5% 2015 Actual $ 1,746,587 1,987,341 87.9% 2016 Actual $ 1,771,828 2,101,629 84.3% 2017 Actual $ 1,715,008 2,349,700 73.0% 2018 Actual $ 1,643,215 2,175,910 75.5% 2019 Actual $ 1,505,659 2,138,562 70.4% 2020 Actual $ 1,694,699 1,816,414 93.3% 2021 Projected $ 1,313,517 2,057,722 63.8% 2022 Projected $ 1,320,417 1,905,300 69.3% - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 2013 Actual 2014 Actual 2015 Actual 2016 Actual 2017 Actual 2018 Actual 2019 Actual 2020 Actual 2021 Projected Fund Balance Budget Target Fund Balance The fund balance projections presented in the packet and this presentation are base on budget expenses of the budgeted year. Fund balance coverage can also be evaluated based on future year expense. This is not shown. Proposed 2022 Capital Expenditure Highlights General Capital Fund 401 1. Broadband Expansion Funding -Additional funding in the amount of $319,000 for internet expansion projects with Midco Communications for broadband internet, which will be intended for direct aid projects and/or grant matches to help leverage Minnesota Border-to-Border Broadband Grants. This funding is intended to meet The Year 3 goal of the City’s 5 Year Plan for broadband internet buildout. 2. Bliss Neighborhood Stormwater Improvement Project Conducted in collaboration with the Carnelian Marine St. Croix Watershed District is intended to improve water quality and introduce new stormwater improvements.Enhancements include additional structures for infiltration and the control and diversion of stormwater.The project is scheduled to be completed between the building seasons of 2022 and 2023, pending a grant award obtained through an application submitted by the watershed.The City's anticipated cost share of 12.5% of the project cost share over the two years is approximately $55,000.An additional project scheduled for 2024 continues this project to completion by acquiring a drainage easement and the install of a directionally bored drainage pipe to the west is to improve water diversion.This element of the project is not eligible for grant assistance and is estimated to cost around $115,000.All elements of this project will be reassessed for implementation pending notice of the status of the grant awards. 3. Replacement of the Community Center Main Entrance Exterior Doors -The current doors are believed to be original to the building's 1985 construction.The lock mechanism is obsolete for the application to an electronic locking mechanism, and replacement of these doors with new ones are anticipated to improve building efficiency and reduce energy loss due to the current large door gaps.Replacement is anticipated to cost approximately $21,000. Replacement of Community Center HVAC -The facilities maintenance plan notes that one of the 4 HVAC systems in the Community Center has reached the age for replacement.The estimated cost is $31,000. Proposed 2022 Capital Expenditure Highlights Local Road Improvement Fund 408 Melanie Trail N Resurfacing and Stormwater Project - This project, which received preliminary engineering approval earlier this year, is anticipated to be bided out next spring for construction in mid-to-late summer.The project, estimated to cost between $680,000 to $707,000 consists of asphalt reclamation and replacement, stormwater improvements, and potential soil corrections depending on existing soil conditions.The Comfort Lake Forest Lake Watershed District is also working concurrently on the project to address water quality issues impacting Bone Lake. Proposed 2022 Capital Expenditure Highlights: Equipment Replacement Fund 406 Replacement of the City’s Grass Cutting Farm Tractor -The City currently owns a 1999 John Deere 6410 Tractor with a rear and side mounted boom for mowing.This piece of equipment was once the Public Works Department’s most used, as it was used for loading, lifting, ditch mowing, and a variety of other tasks.Since the purchase of the front-end loader last year, this equipment is now used exclusively for ditch mowing.However, the tractor has experienced numerous costly mechanical, hydraulic, and electrical failures resulting in repair costs for this year alone exceeding $8,000.It is highly recommended that a replacement is purchased along with compatible mower boom attachments.The cost of this equipment acquisition is approximately $260,000.Park Improvement Fund 404 1.Replacement of the Community Center Playground -This project, currently being lead by the Playground Sub-Committee, is a project proposed to be complete in 2022.This proposed budget includes $100,000 in financial support from this fund.It is hoped that these funds can be leveraged with other financial and in-kind community support from organizations such as local businesses and the Scandia-Marine Lions Club.Major grant funding will be needed to be applied for early next year.It is hoped that the project will exceed city-funding to provide for an entertaining, appealing, and accessible play structure for years to come.Yearly phasing for additional enhancements are being considered including accommodating additional age groups and physical fitness equipment for adults and teenagers. 2.Final Season of Prairie and Wetland Restoration at Lilleskogen Park -This $11,000 expense fulfills the final year of DNR grant funding for restoration of native plantings and removal of invasive species in the park.Given this has and will remain an ongoing issue in this park, it will be prudent in the years to come to potentially reapply for this program.