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3)a Draft Proposed 2023 Budget Summary 9-7-20222023 Budget/Levy Discussion September 7, 2022 – City Council Budget Workshop Tonight’s Discussion will focus on: •Brief Introduction to the proposed 2023 General Fund Budget •Review of Rough 2023 Draft Proposed Capital Improvement Plan. •Review the General Fund and Capital Improvement Plan’s Projected Costs and Impacts You are encouraged to share comments questions and changes to the proposal at anytime! 9/7/2022Draft 2023 Budget Proposal Summary Presentation 2 General Fund 101 Highlights •An 11precent increase in tax levy amount over last year for $1,759,213, and this accounts for most of the 10.3% increase in revenue. •Wages have been increased 5.77% based on the 2019 Wage Study Salary Tables. •Non-union health insurance has estimated to increase by 10% but actual estimates will not be available to the last week in September. Costs could be much lower or higher. •Union health insurance is estimated to change by 5%. •Workers Compensation insurance and Property, Casualty, and Liability has 10% increase •Administration •$3,800 increase for Insurances, $3,300 increase in software licensing, $4,000 increase for financial advising, $15,000 increase in legal services, $3,500 increase for audit, and $8,700 for health insurance •Decreases to training costs, operating supplies, share of disability costs due to reallocations, equipment rental, general legal notice publications. 9/7/2022Draft 2023 Budget Proposal Summary Presentation 3 General Fund 101 Highlights •Mayor/Legislative •Decrease in travel budget •Elections •Decreased due to no elections in 2023 just equipment maintenance costs. •Planning and Building •$22,000 increase for planning services •$600 increase to publication costs •$3,200 increase for insurance •Police •Sheriff Contract Cost up $18,100. •Fire and EMS – See Chief Hinz’s Wage Increase Proposal •Increases to fuel Workers Comp Insurance, Utilities, and Dues 9/7/2022Draft 2023 Budget Proposal Summary Presentation 4 General Fund 101 Highlights •Animal Control up $1,000 •Public Works •Wages up 4.3% based on department distribution •$25,500 increase to health insurance costs (estimate available later this month). •Workers Comp up $9,500 •General increases to equipment repair, parts, tires, and maintenance. •$3,000 increase for tool budget. •$7,500 increase to road repair •Parks and Recreation •Only 1 summer seasonal budgeted. Decrease by $7,400 •Small increases to structure repair and WC Insurance •Community Center •Large unexpected 2022 expense was community well failure $13,675. •Transfers •Further estimates and refinement of costs will be used to transfers to Capital, unless otherwise instructed 9/7/2022Draft 2023 Budget Proposal Summary Presentation 5 Capital Fund Highlights – General Capital Fund 401 •No items removed from outlay. •The City Council has earmarked $432,000 to support 2023 Broadband In Buildout, this is $125,000 higher than the $307,000 originally planned for this year. •Deficit Spending in this fund over the last few years has caused decline in the City’s cash position. Ending cash position is anticipated to be around $300k to $500k over the next 3 years. (This takes into account payables for uncompleted internet buildouts.) •Restoring a stronger cash position will require a “rest period”. In this proposal iteration the planned internet funding expenditure for 2024 was left unchanged for that year and the remaining projects for that year (Lines 44 through 48 were adjusted to 2025) and projects on lines 39-64 were pushed out to accommodate a 4 year spending break in 2026 and 2030 to rebuild fund balance. 9/7/2022Draft 2023 Budget Proposal Summary Presentation 6 Cont. - Highlights – General Capital Fund 401 •$50,000 was added to the Capital Improvement plan for 2023 (Line 38) as part of a $200,000 grant planning process for long-range pedestrian and bicycle improvements in the Village Center. The project would also include MnDOT’s participation and financial support. •The City’s Gateway Trail request through LCCMR was approved last week for a $2.6 Million allocation to buildout a pedestrian tunnel, re-align a small segment of County Hwy 52 (Oakhill Road) to make room for trail, and to build a trail from it to a trailhead parking lot behind Meister's. •Although this project has no match requirement, it was only provided 88% of the original amount requested; approx. $3.07 Million. The remaining 12% of this cost, $368,400 will need to be closed or the scope of this project will need to be amended to be within the grant allocation. •There remains $100,000 in DNR Park and trail funding that can be utilized to cover some of this gap. 9/7/2022Draft 2023 Budget Proposal Summary Presentation 7 Cont. - Highlights – General Capital Fund 401 •Washington County has agreed to serve as fiscal agent for this project so we will not need to process this project through this fund. However, given the project will receive funding for build and completion in the summer and fall of 2023, the City may want to consider making improvements to the Annex Property where the trailhead parking lot will be located (behind the building where the dirt lot is). •Possible improvements could include landscaping and replacement of existing asphalt surfacing to given asphalt work will be done on the new lot. •Considerations •What are the City’s overall fund balance goals? •Are the projects or equipment purchases that could be deferred to meet these goals? This consideration can be considered across all 4 funds. 9/7/2022Draft 2023 Budget Proposal Summary Presentation 8 Highlights – Park Fund 404 •The Park Capital Fund has available funds to fund improvements through next year, but has very little contingency for project overages. It is estimated to have around a $6,000 balance by 2023 Year End. •Considerations may want to be made regarding making additional improvements to the Community Center Playground Site post 2023 construction. •The Park and Recreation Committee will be reviewing this budget this month to provide a recommendation based on projections. •The Council and CIC are requested to offer recommendations and any direction. 9/7/2022Draft 2023 Budget Proposal Summary Presentation 9 Highlights – Equipment Replacement Fund 406 •It is anticipated that the equipment replacement fund will be able to maintain its capacity of expenses with the utilization of 10 year bank certificates. Which have typically been offered with competitive interest rates. •42,600 can be covered through levy but approximately $800,000 will require debt in 2023 based on the proposed plan. •There are not anticipated funding issues with this fund but a break period may also be needed in a few years. 9/7/2022Draft 2023 Budget Proposal Summary Presentation 10 Highlights – Road Improvement Fund 408 •This fund’s proposed budget proposes that bonding for roads take place every 4 years, but scaling back in 5 years and imposing a break period at some point will be important to allow for the reduction in debt service levy. •Deferring Road Projects can help improve debt capacity and fund balance, but can also delay critical improvements. 9/7/2022Draft 2023 Budget Proposal Summary Presentation 11 Complications to consider for this year’s levy and tax rate •Recent changes in property values have increased the tax capacity by 31%, which is unprecedented. •This proposal has been estimated to match the existing tax rate per City Council direction at 30.945%. •Property owners with increased property value will see an increase in tax payments. •It is difficult to predict the changes in future property value due to current market conditions. Future years were estimated to have modest changes that are no more than 9/7/2022Draft 2023 Budget Proposal Summary Presentation 12