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2026 Projects <br />As we review the 2026 projects, does the Council have any questions, comments or concerns <br />about including them during budget preparation? <br />2026 Property Tax Levy <br />The levies for the Equipment/Building Replacement (from $100,000 to $250,000) and Public <br />Safety Capital ($260,000 to $300,000) funds are currently proposed to increase in this plan. What <br />increases, if any, should staff assume? <br />2026 Rate Increases - Enterprise Funds <br />A rate study was completed in 2018. Annually, staff perform a review to ensure rates are at an <br />appropriate level in order to meet future anticipated expenditures. Rate increase assumptions are <br />proposed in 2026 and in future years in order to maintain a positive fund balance across the three <br />funds. What changes, if any, should staff assume? <br />Local Government Aid (LGA) <br />The omnibus tax bill includes an $80 million annual increase in local government aid. Arden <br />Hills received $121,471 of LGA in 2024 and is expected to receive $122,591 in 2025. Staff <br />recommends that these funds are not used for general operations (the state has unallotted LGA in <br />the past) but instead direct them toward capital projects. They are included in the PIR Fund in <br />this plan, similar to last year. <br />CIP Franchise Fees Update <br />Included in this budget are franchise fee revenues of $435,000 annually that will be used to offset <br />debt service for the new fire station of approximately $270,000 annually. Excess franchise fees will <br />be approximately $165,000 annually. During the October 14, 2024 Work Session, Council's <br />consensus was to direct any excess franchise fees towards paying down the principal balance on <br />the bond. The City may elect, starting on February 1, 2035, to prepay the bond. Staff will bring <br />this topic back at a future discussion upon completion of the new fire station project. <br />Budget Impact <br />The Council should review the estimated fund balances and funding sources with special attention <br />given to the PIR and Equipment/Building Replacement Funds. <br />When considering what tax levy increases are needed to support the capital funds, it should be <br />noted that preliminary results of department submissions and other assumptions have the General <br />Fund expenditures increasing by $677,682, which would equate to an 11.2% levy increase. This is <br />without taking into account any changes to the revenue budget from 2025. Attachment D gives a <br />preliminary snapshot of the increases being considered for the General Fund. <br />Attachments <br />Attachment A: PowerPoint Overview of Capital Improvement Plan <br />Attachment B: Capital Improvement Plan <br />Attachment C: MSA Summary <br />Attachment D: Preliminary expenditure increases for 2026 General Fund Budget <br />Attachment E: Equipment Replacement Guidelines <br />Page 4 of 4 <br />