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3. 12-1-2021 TNT Presentation 2022 Budget & Levy2022 Budget/Levy Truth in Taxation Public Hearing December 1, 2021 –City Council Budget Workshop Tonight’s Discussion will focus on: ❖Presenting the Proposed 2022 Budget for public comment and the property taxes needed to pay for the total expenditures budgeted for 2022. ❖Discussion of the 2022 Levy and Tax Rate ❖Review of any budget line-item concerns. ❖Review of 2022 Capital Expenditures. ❖Utility Rates for the Big Marine and Uptown Sewer Utilities are part of a separate discussion this evening. Understanding the Property Tax System ❖Assessor sets proposed property values as of January 1 for the following year taxes. Values are based on comparable sales. ❖These values are sent to the County Auditor. Auditor then sends property specific notices to property owners notifying of the value change. Included in the notice is the information about the Board of Review meeting. ❖City Council conducts Board of Review meeting in April of each year; this is when residents can question their proposed values. ❖Values are then finalized and set for calculating the taxes. ❖In September the City sets the maximum levy amount which is used to calculate taxes in notices mailed in November ❖City and other jurisdictions adopt levy and budgets in December. Tax rates are calculated by County based on the levies adopted by each jurisdiction. 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. Proposed Changes to Levy and Tax Rate •The City Council set the 2022 preliminary tax total levy at $2,579,051. That is $68,227 increase over last year’s levy of $2,510,824 for a 2.68% change in levy. •The preliminary tax rate is estimated to be at 30.8465%. That is an approximate increase of 0.013%. The City Council had set a preliminary tax rate goal of the rate at 30.128% to attempt to match the 2021 rate of 30.191% That goal was essentially met with an approximate cash difference of $5,100. Note: The tax rate estimate in the previous slide were based on newer estimates that came out earlier this month for Total Net Tax Capacity. Estimated Impacts on Property Taxes $1000 of Value $100,000 of Value $250,000 of Value $389,211 of Value*$400,000 of Value $500,000 of Value $1,000,000 of Value Class Rate State Taxing Classification Payment PY Diff Payment PY Diff Payment PY Diff Payment PY Diff Payment PY Diff Payment PY Diff Payment PY Diff 1.00%Class 1a Homestead Under $500k $3.01 -$0.07 $301.28 -$6.87 $753.21 -$17.17 $1,172.63 -$26.73 $1,205.13 -$27.47 $1,506.42 -$34.33 1.25%Class 1a Homestead Over $500k $0.00 $0.00 $0.00 $0.00 $0.00 $3,389.44 -$77.25 0.50%Class 2a Agricultural Land first $1.5Mil $1.51 -$0.03 $150.64 -$3.43 $376.60 -$8.58 $586.31 -$13.36 $602.57 -$13.73 $753.21 -$17.17 $1,506.42 -$34.33 0.65%Class 2c Managed Forest Land $1.96 -$0.04 $195.83 -$4.46 $489.59 -$11.16 $762.21 -$17.37 $783.34 -$17.86 $979.17 -$22.32 $1,958.34 -$44.63 1.50%Class 3a Commercial-Industrial, Utility first $150k $4.52 -$0.10 $451.93 -$10.30 $0.00 $0.00 $0.00 $0.00 $0.00 2.00%Class 3a Commercial-Industrial, Utility over $150k $1,280.45 -$29.18 $2,119.29 -$48.32 $2,184.31 -$49.78 $2,786.87 -$63.52 $5,799.71 -$132.24 Total Net Tax Levy:$2,579,051 Estimated Tax Rate:30.128%C Change in Rate over PY:-0.062% % Change in Levy:2.68% * This estimated tax rate is based on estimated property values. Final figures may vary. Share of 2021 Preliminary Tax Rate County 30.18% City 33.77% Forest Lake Area Schools 26.68% CMSCWSD 6.56% All Other 2.65% County Referenda 0.00%School Referenda 0.17% County City Forest Lake Area Schools CMSCWSD All Other County Referenda School Referenda *This is just an example. Other properties could be located within another watershed or Chisago Lakes School District. What is the 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 County and City assessor •Changes in state property tax classifications •Homestead Market Value Exclusion City Budget Calendar ❖May-August –City Council Work Session budget overview ❖September –City Council adopted resolution certifying maximum tax levy. ❖November-County mails proposed property tax statements based on maximum levy amounts ❖December 1nd -Public hearing on 2022 budget ❖December 21th -Council adopts 2022 budget Summary of Funds ❖General Funds ❖Operating Budgets by Department ❖Special Revenue Funds ❖Cable Television Fund and Economic Development Authority Fund ❖Debt Service Funds ❖Bonds for Road Improvements and Loan Certificates for Capital Equipment ❖Capital Funds ❖General Capital, Park Improvement, Equipment Replacement, and Road Improvement ❖Enterprise Funds ❖Big Marine Sewer (Anderson/Erikson & Bliss Systems) and Uptown Sewer ❖(To be discussed separately.) Budget Highlights –List of Proposed Changes Here is the summary list of proposed changes to the 2022 budget since last discussed as part of the preliminary budget. 1.A proposed amendment to move $20,000 for the Administrative Department Legal Services line item (101-41000-304) to a new line item specifically for expenditures for Sheriff’s Office special petrol costs (101-42100-408). 2.A proposed amendment to the 404 Park Improvement fund to include $15k for a comprehensive park planning project to guide future development and improvements with in the City’s park system. 3.The Amendment to the Capital Improvement Plan for: •Estimates for the Bliss Addition Neighborhood Stormwater Improvement Project were adjusted to more accurately match the $500,000 estimate. This project is currently dependent on a grant currently being obtained with the assistance of the Carnelian Marine St. Croix Watershed District. The city would be responsible for only 12.5 percent of the half million cost for approximately $55,000 to $69,000. One element will still require $115,000 of direct city funding due to its ineligibility under the grant. •The preliminary Capital Improvement Plan included a funding break for years 2024 and 2025. This delay has been tentatively removed. Further analysis for fiscal years 2023 or 2024 may require consideration of bond financing. The City’s largest bond issue is paid off in 2033, for the 2018 street improvements. Budget Highlights •Budget Summaries can be found in your budget packets: •The American Rescue Plan Act (ARPA) –Under the course of to payment settlements, on in 2021 and the second in early 2022, the City will receive $441,892 for eligible expenses, to be utilized by the year end of 2024. The City Council has not approved an allocation of these funds, which remain in an independent fund until a decision is made. This decision can and should be delayed to allow the Sewer Committee and Internet Action Committee to provide a recommendation. •Although staff has recommended that these funds be allocated toward the $1.4M Bliss WWTP Nitrate Reduction Project, due to the Big Marine Sewer Utility's deficient long-range financial position, the other possible eligible use that has been discussed is broadband internet expansion costs. Eligible uses include: •Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year prior to the emergency. (The City exceeded expected permit revenues and collected the majority of property tax. The City will not be able to make use of this.) COVID-19 expenditures or negative economic impacts of COVID- 19, including assistance to small businesses, households, and hard-hit industries, and economic recovery. (Washington County had implemented . •Premium pay for essential workers (This use has not been considered.) Continued… Budget Highlights -Continued •Authorizing legislation specifically prohibit use of these funds to directly or indirectly to offset tax reductions or delay a tax or tax increase. •Works projects for water, sewer, broadband, and building health, security and efficiency improvements. Road projects do not appear to be eligible. •The Build Back Better Act will likely provide additional funding for facilities, road, broadband, water, and sewer. However, this legislation is pending approval from the US Senate and will likely face amendments. (If this legislation is passed, it may be prudent to request that Washington County make an allocation to the Bliss WWTP Nitrate Reduction Project from these funds, due to the unique nature of their prior ownership and operation. (Washington County allocated $2M to Stillwater for a sewer and water extension project for economic development under the ARPA.) Budget Highlights –Capital Improvement •Broadband Internet Expansion Funding -$319,000 to be leveraged with other grant funding sources to expand internet access within the City limits. The City has a goal to reach 100% of households by 2024. •The Bliss Neighborhood Stormwater Management Project (mentioned previously) •$20,000 for the replacement of the Community Center exterior front doors and to install electronic locks their and the kitchen door. •$31,000 for HVAC improvements to Community Center. •$100,000 towards the installation of a new playground at the Community Center. •$11,000 for final wetland restoration work at Lilleskogen Park. (Covered by grant.) •Park Plan (previously mentioned. •$198,500 for purchase of new farm tractor and attachments for ditch mowing. Budget Highlights –Capital Improvement continued •Resurfacing and minor stormwater improvements to Melanie Trail North and a portion of 238th Street North. 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. Budget Highlights -Continued Personnel Costs •In Salary and Wages, budgeted expenses went by approximately $25,000. Mostly attributable to a $28,900 increase to add one additional seasonal laborer for the summer season for grounds maintenance and gardening. Other cost increase include: •Additional $10k for costs associated with hiring a new DPW Director •$4k for proposed adjustment to the grade placement on the City’s salary schedule for the Administrative Assistant position. •$17,300 to general and union step increases. •Costs were shifted from administration to planning and building to better reflect costs associated with the collection of fee revenue. Budget Highlights -Continued Planning, Building, and City Assessor •No major changes. $7,600 decrease was made to planning costs due to lower hourly rates. Public Safety •$20k introduced for additional summer petrol/CCTV •$17,400 increase to Fire Protection with $5,900 for retirement contribution and $8,000 for additional training expenses for 6 new members. Public Works –Up by $18,300 •$10k for new director and a $5k for road maintenance increase. Administration & Finance •Budget reduced by $13,500. $8k of legal to police services and $11k redistributed to the planning and building department. Budget Highlights –Continued… Parks, Recreation, and Community Center •Mostly additional costs for new seasonal laborer, replacement of park tables and garbage cans, and repairs to appliances in the Community Center Kitchen. 2021 Projected General Revenue Sources Taxes 84% Special assessments 0% Intergovernmental revenue 4% Licenses and permits 6% Charges for services 3% Fines & Forfeitures 1%Interest earnings 1% Refunds and reimbursements 0% Donations 0% Grants 1%Miscellaneous revenue 0% Transfers from Other funds 0% 2021 Budgeted General Expenditures General Government 25% Public Safety 19% Public Works 30% Capital Outlay 1% Culture and Recreation 6% Transfers to other funds 19% Governmental Fund Revenue Summary Governmental Fund Expense Summary Next Steps ❖Open Public Hearing for Public Comment ❖Discuss 2022 Budget and Levy ❖Adoption of 2022 budget and tax levy at the Council meeting on Tuesday, December 21, 2021 at 7:00 p.m.