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HomeMy WebLinkAbout7A, 2011 Operating Levy Payable 2012 and 2011 Truth-In-Taxation� EN HILLS Request for Counc�� Action Prepared By: Sue rversan, Director of Finance Council Meeting Date: September 12, 20ll and Adrninistrative Services 2Q11 Operafing Levy Payable 2012 and 20ll Truth-In-Taxation Hearing Date B�dgeted Amount: Act�al Amount: Funding Sourc�: NIA N/A N/A Reco�mendafion• 1. A motion to adopt Resolution 2011-045, a resolutian setting the preliminary �evy for taxes payable in 2012 in the amount of $3,132,264. 2. A motion to adopi Resolution 2011-046, a resolution adopting Truth-in-Taxa#ion hearing dates for proposed iaxes payable in 2012. The date establishc� is December �, 2011. Supportin� Documents: 1. Memorandum dated September 12, 2011 from Sue Iversan. 2. Resolution 2011-045. 3. Resolu�ion 2011-046. � EN HILLS MEMORANDUM DATE: September 12, 2411 TU; Honorable Mayor and City Council FROM: Patrick Klaers, City Administrator Sue Iverson, Directar a� Finance and Adnainistrative Services SUSJECT: Esiablishing 2011 Truth-In-Taxation Hearing Dates Adoption of the Preliminary 2Q ll Operating Levy Payable in 2012 Bac�ground: By Septetnber 15, 20I 1, the City is reyuired to adop# and certify to Ramsey County a preliminary levy and Truth-In-Taxation hearing dates. Discussion�: Uperatin� Le� Based on City Cauncil direction at the August 29, 2011 work session, staff has prepared a preIiminary levy of $3,132,264. (This is an increase of $91,300 over the number given to the City Councit at the work session as staff has incozporated the chang�s r�quested by ihe City Council.) There are no levy lirnits for taxes payabI� in 2012. The proposed levy is a 3.0% increase over the 2011 levy; however, the City's portion of the levy zs $2,869,920 after Fiscal Dispariiies which equates to a 4.7% increase over the 2011 City portian of the levy of $2,740,931. This results in a. 7.0% increase in the Tax Rate from 2011, as the City's tax capacity fell by $243,213 or -2.1 % due to market changes and the formula changes for t�able val�e regarding the Market Value Exclusion program (MVE}. The impact on an average tnedium home valued at $272,800 is an increase of $31.63 or 4.9% annually. The average decrease in market value for residential property in Arden Hills was 1.2°/o. Determination of �he preliminary levy amount is based on 2Q12 budget information asse�bled to-date. (This inforrnation is summarized in Attachment A.) Public Safety accounts for 1.9°/a of the levy increase and $7.62 or 2G.1% of the taY inerease to the average madium homeowner in the City of Arden HilIs. Without the public safety increase, ihe budget would show a l.�% increase in the Levy over last year. {If no chang�s were made to the levy over last year, the average rn�dium homeowner in the City of Arden Hilis would still see an increase of $1 Q.22 in their property taxes as a result of the Legislative changes and market shifts - see Attachment A.) Memo City Council 2011 Truth-in-Taxation Hearing Dates and 2012 Preliminary Tax Levy 2 Truth-in-Taxation Hearing Dates: The 20a9 Legislaiure changed the Truih-in-Ta�ation laws. We are now only required to announce and schedule one regular meeting at which the council discusses the budget and levy and takes comments fro�x� t�ae public. We may adop� the budget and final levy after the hearing during the same meeting. The meeting must be bettiveen November 2� and December 26 and must occur at or after b p.m. We must notify the county auditor by �eptember 15`� of the meeting date and time. The Council rnay choose to have a separate meeting ar may choose to do this at a regular meating. 5taff is providing two options for the Council to choose from: Monday, December 5, 2011 — 6:00 p.m. (Special meeting) or Monday, December 12, 2Q10 — 7:00 p.�n. —(Regularly sched�zled meeting) Tt is anticipated the Council will adopt the final 201 i levy payable in 2012, and the 2012 budget, on Decem€ber 12, 2011. Recammended ActioQ: 1. Adopi Resolution 2011-045, a Resolution setting the preliminary levy for taxes payable in 2012 in the amount of $3,132,264. 2. Adopt Res�lution 2011-046, a Resolutian adopting Truth-in-Taxation public hearing dates for proposed taxes payable in 2012. The date established is Decetiiber �, 2411. Attachment A Nlemo dated September 12, 2411 � EN HILLS �►�� .�����i�� DATE: September 12, 201 l. TO: Honorable Mayor and City Council FROM: Patrick Klaers, City Adminisirator Sue Iverson, Director of Finance and Adnainxstrative Services SUBJECT: 2012 Proposed Preliminary Budget and Ta� Levy INTRODUCTION In prepaz�ation for adoption of the preliminary tax levy at the first meeting in September, this �nemo addresses the foilanving information: preliminary tax levy, residential property values, operating budget, salary and b�nefit changes, and prelirniz�ary f�nd balance projectians. This information has been updated bas�d on the feedback received from the City Council at ihe August 29, 2011 work sessian. PRELIMiNARY TAX LEVY The table below provides a cozx�parisan of the 2011 adopted levy and ihe �evy needed to support the prelimFnary 2412 budget and capital projects. It also shows a comparison o� the City's t� rate. You wili see that fik�e Ievy has increased by 3% over 2011 and the tax rate has increased, this is due in part to the cha�ge in legislation regarding the Market Va1ue Homestead Credit {MVHC) prograzxz, a xeduction in our share of fiscal disparxty dollars, and the increase in the levy. Memo City Council 2012 Proposed Preliminary Budget and Tax Levy 2 RESIDENTIAL PROPERTY VALUES According io information provided by Rarnsey County in March of this year, the median horrze value in Arden Hills will decrease from $276,000 �ar 2011 t�es, to $272,800 for 2012 taxes which is a 1.16% drop i� value compared to the county average decrease of 4.41 %. The MVHC program was replaced with the ner�v Market Value Exclusion (MVE) program, which reduces the local taxable value of homestead properties under $413,800 at which point the credit is phased out. This afFects the Ciiy's tax rate as it redc�ces the overall taxable value of the City. All jurisdictions will see an increase in tax raies in 2012 as a result of this change. • Old MVHC Pro�ram Under the old MVHC program, home property taxes were reduced by a State credit. The prograzx� was designed to hold local goverr�ments harmless by a reimbursement from the �tate of Miz�.nesota for the sum af a�l credits provided. As the City Couz�cii is aware, this credit has been red�ced or eliminated altogether in most years due to Staie budget cuts. (It was only fully funded one year out of the nine that it was in effect.) Another cozx�plicating camponent of the old MVHC program was that the estimated amount of crediis needed to be included in ihe City's levy, even tk�ough no reimb�arsemeni from the State wauld occur. This caused a n�ismatch between the adopted l�vy and the actual levy collections. • New MVE Pro�ram Under the new MVE program, a portion o� t�Ze home's market value is excluded for tax purposes. This creates a new Taxabie Market Value (which is lower than the estimated Market Value}, as well as a red�ced value for tax co�putations (ta�able value). On� b'rg advantage of this prograzn is that the siate credits are eliminated, which mearzs there is no need to add estimated MVHC cred'zts to the a�erall levy amount. The following table pravid�s an exa�ple o� how the new prograa�n will work for five different home values. Hoxnes valued at $76,000 receive the maximum value reductian, and homes valued at $413,800 (value at which th� exclusion is phased out) and above receive no value reduction. Memo City Council 2012 Proposed Preliminary Budget azld Tax Levy 3 Home Market Value $ 76,000 $150,OQQ $ 272,800 $ 350,D00 $ 500,040 Mar[cet Val�e Exclusion 30,400 23,740 12,688 5,740 - Marfcet Valus Afer Excl�si�n $ 45,600 $126,260 $ 260,1 T2 $ 344,260 $ 50Q,000 Taxable Value - OLD $ 76q $ 1,500 $ 2,728 $ 3,500 $ 5,040 Taxable Value - NEW $ 45B $ 1,263 $ 2,601 $ 3,443 $ 5,000 Difference in Ta�ble Value -�40.4% -15.8% -4.7% -1.6% 0.0% In order to evaluate the true impact io ihe residential property owner, you need �a take into account Xhe decr�as� in fiscal disparities, the change in the taxable value be%re tk�e MVE, and the eifects oi the new MVE pragram. To help illustrate this, ihe foilowing table shows the impact to the residential property owner due to the reduction iz� fiscai disparit� dollars, changes in fhe assess r�arket value, and changes in the City's overall taxable value be�ore ihe new legzslation. This would be an "app�es-to-apples" comparison as it is the same formula used in 2011 if we use a 0% levy increase. Pay 2012 MV 500,000@1.OMo (B7 x E}+ 76,o�0�.4o% X0.934 rem � 1.25% (612 x D) - rem�.09% {G} x% EatimatedTax �islrictrate es % aftatal rate: -�21%:���'���.� 150,OD0 1,500 $3fi5.�6 $237.40 $49.85 ,•:272;800 2,728 $663.33 $126.88 $26.64 `,'=_=350_000 _ 3.500 �851.80 $57.4D $t2.05 .38 {F) - {F{) � Annual Inctease Monthlv incr. $315.21 $2.33 $ 0.19 $fi37.27 $4.06 $ 0.34 $839.75 ($5.18) $ (D.43) 1,216.85 ($14.p4) $ (0.84} 9,977.38 ($13.84) $ (1.15) Memo City Council 2012 Proposed Preliminary Budget and Tax Levy 4 As previously noted, you now must no�v account for the new MVE which reduces the taxable �a�ue of the Ciry as the new prograz�n "e�cludes" a portion of the taxable value of qualifying �omesteaded property. We also use a 0% zncrease to calculate this effect. Pay 2011 MV 76,OOP�.40% X0,988 �amuplo413�3s�na {D-E} Estimated Yax District rate as °/a of rotal rate; `:150,000 23,744 '[26,254 " 272:800 '[2.688 2B4.112 sao,000c�i.o i� ;e� x cs+ � {e� x cr � rem � 1.25°h {812 z 0) {B12 x D} N!A 6.38 7 The net effect on the residential taxpayer 2012 will be as follows: Tatal Change Annual Increase Monthly incr. i$1.i6) $ i0.10) $10.22 $ 0.85 $17.54 $ 4.46 $25.61 $ 2.13 $44.09 $ 3.67 Taxable Sefone Legislative Change Val�@ Impact from Maricef Shifts Impacl from Legislative Chg Total Change B14 Credit Annua! Increase Monthly iner. Annuaf Increase Monthlv incr. Annual Inerease Monthly incr. 150,000 ($2.33) ($0.19) $1.17 $Q.'10 ($1.16) $ {0.14) 272,800 ($4.06) {$0.34) $�4.2$ $�.19 $1Q.22 $ 0.85 350,000 $5.�8 $0.43 $22.72 $4.89 $1'7.54 $ 1.46 5Q0 ODO $10.Q4 $0.84 $35.65 $2.97 $25.61 $ 2.13 7'50,000 ($13.84) ($1.15} $57.93 $4.$3 $44.09 $ 3.67 Me�no City Couzacil 2012 Proposed Prelznraz�ary Budget and Tax Levy 5 The £oilowing chart illustrates the total effect including the 3% increase in the levy. {This is the same in%r�xxation shown on page one of this mer�o.} Pay 2D11 MV 7QOOOQ.40% 500,000@�.6% (B7 x G) � X 0.988 remuptoa�a�es�.os (� - E) rem � 1.25% (B12 x D) Estimaied Tax District rate as °k oF total rate: �E{' ;' '<.::150.ODfl 23.740 126,260 1,263 " ` 272, 800 1 350;000: � � � 112 2,601 260 3.443 125 (97 x G) + (B12 x Q) T 78 Toial Change Annual increase Monthly incr. $31.63 $ 2.64 $45.88 $ 3.82 $66.76 $ 5.56 $110.96 $ 9.25 The net effect an the reside�tial taxpay�r in 2012 will be as follows: Memo Ciry Council 2012 Proposed Pxeliminary Budget and Tax Levy b OPERATiNG BUDGET Sala and Benefits The 2012 preliminary budget was prepared assuzxaing a 1.5% wage acljust�nen� for non-union staff {1.0% Jan 15tI1.0% Jul lst} and a 1.0% vcrage adjustment for unian staff (1.0% Jan 15t). As previousiy discussed with the City Council, in surveying surrounding communities, most have included a 2.0% COLA increase in their preliminary estimates at this #ime. The budget also ass�.unes a$21 per month increase in the City's contributian to h�alth and dental insurance. The increasa for 2012 is 3.6% for medical. In 200$, the City added a high-deductible HSA pla� which has been helping to keep our costs low, in 2011 we saw a decrease af 13.1%, so there was no increase in the City contribution iz� 20 � 1. Dental has been estimated at 10% as we have not y�t received the actual rates from the insurance carrier. General Fund Revenues and expenditures are shown in the table below. We have highlighted ztems that impact tl�e ta� levy and proposed budget on ihe next page to give you a brief overview. More detailed coz�n�entary if found in the department and fund pages of the budget doc�r�ent. City of Arden Hiils General Fund Actual Actual 8udget Amended Actual Proposed Adopted °/a Change FY 2009 FY 2Q10 PY 203 t FY 2U11 6130111 FY 2012 FY 2012 11 vs 12 Revenu�� Ta�s Licenses and Permifs plher Intergovernmenta[ Charges for Services Fines & ForFeiLs 5pecial Assessments Miscellaneous iransfers Tatal Revenues Expenditures bv_Ca{�aON Personal Senrices Materials and Supplies piher Sen,ices and Charges Capifal OuSay 7ransfers CondngencylReserves %ta[ Expenditures 2,835,253 2,867,028 3,069,925 3,069,925 (8,961) 3,161,825 - 2.99% 318,849 255,265 252,600 252,640 131,$72 256,850 - 1.68% 'i3U,557 118,981 61,OQp 61,046 38,009 115,5$2 - 89.48% 395,29D 388,637 386,60i 386,601 165,199 4fl3,775 - 4.44% 23,668 2&,'S49 50,44# 50,A41 7,51D 45,462 - -9.87% - - - - - 210 - 4.00% 42,945 53,054 76,650 76,656 t4,787 73,922 - -3.56% 0.00°/a $ 3,752,563 $ 3,711,515 $ 3,897,217 $_ 3 S97 2i7 $ 348.215 $ 4 057 626 $ 4.12% $ 1,30Q,333 $ 1,358,488 $ #,319,470 $ 1,319,476 $ 677,461 $ 1,343,824 $ - 1.85% 962,9fl5 22&,136 195,i30 195,136 99,973 188,D85 - -3.61% 1,935,629 1,914,592 2,129,Sfl6 2,129,806 894.$77 2,285,7�7 - 7.32% - - - - 176 - - 0.00% 378,69& 279,266 252,699 252,fi06 - 240,D00 - -4.99% 20,211 20,21� __1Q0.00% $ 3,777,56�4 $ 3,7fi9,482 $ 3,917,217 $ 3,917,217 $ 1,672,487 $ 4,057,626 $ - 3.5&% Fund Balance - January 1 2,145,930 2,120,329 2,o62,962 2,062,952 � 2,D62,962 2,042,962 F�ccess Reaenue O+,er E�enditure 25 001 57 367 20 oU0 20 000 1 324 272 � Fund Balance - December 3t $ 2,12D,929 $ 2,062,962 $ 2,042,9s2 $ 2,Ok2,9b2 $ 738,689 $ 2,042,96T Memo City Council 2012 Proposed Prelz�inary Budget and TaX Levy 7 Revez�ues AIl revenue items were evaluated based on cuzxent econam�c conditions and past trends. The most notable item is with the elimination of the General Fund Re�enue MVHC program and the new MVE program, there is nnvHc � 61,��a no longer a need to budget for tlxe MVHC payment Levy Increase 91,300 Water Tpwer Renta�s 10,000 ihat has been �nalloted or cut. In 201 �, the City Program Fie[d Use 5,sso budgeted $61,774 as a negative rever�ue source to Ofher Misc Adjustments a,a9� account for this cut. The 3% levy �ncrease adds $160,409 $91,30p in tax revenues. Water Tower Antenna Rentals are up $10,000 as a result of current contract rates. Aduli and Youth Program Field Use has been added as a result af the direction of the City Council during the discussio� o� the Fee Schedule. Expendit�ares In 2008, EDA expendituxes were z�noved from the EDA Fund to the General Fund under the Plaza.ning & Zoning department as there was a negative fund balance, and transfers to replenish the fund were budgeted from the General Fund. The fund balance in the EDA Fund is now estimated to be appraxirnaiely $1.15,000 by the end af 2011. As part of the 2012 budget, the EDA expenditures were moved from the Genexal �und back ta �ie EDA Fund. These consist of prirnarily salary and benefit costs {$40,4f 4), hawever auditing, accounting, IT, and insurance have also been alfocated {$$,788}. The transfer from the General Fund to the EDA Fund has been eliminated. General F�nd Expend'Rures Salary & Benefils Intern Comrnunity Dev Moa+e Costs to EDA Eliminate lransfer to �DA Other Prof Services Admin Public Safety Contract fncr Elections Copy Nlachine & Postage Machine Go�rnment Buildings �[a Contingency B�dgeted Council Training 8� Newsle[ters Increased Fin 5ys & ITcosts 4T Snowplow�rtg Emergency Management Other Misc Adjustments The Co�munity Developr�ent Int�rn position has been increased %r a%2 tirr�e position for a fiill year to help accomplish the goals tk�at were established for the department during the Council goal setting process. Public Safety is increased by $58,820 far increases in the �'ire Contract ($13,467, 3.55%}, Sheri��s Contract ($33,96b, 3.63%), 911 Dispatch Services {$7,053, 16.73%), and Animal Control {$4,334, 72.23%). Animal Control will now be provided by the Raznsey County Sheriff beginning Jan�ary 1, 2012. Other Professional Services were increased in the Administration department to fund costs �or autside consultants for various development activities. $ 34,118 7, 000 {49,252) (12,60U) 91,30D 58, 824 16, 284 16,OOb (28, 933) (20,211) 4, 805 5>670 13,352 (5,654} There were no elections in 2011 as our e�ec�ions are in the even nurnber years. This is an inerease o� $1.6,280 aver the 2Q 11 budget. Memo City Council 2012 Propased Preliminary Budget and Tax Levy 8 $ l 0,00Q has bee� budgeted for a lease on a capy machine. The current copy machine in six years old and was puxchased �or $27,00� and has a trade-in value of $700. The current maintenance agreement expired in June of this year. The current r�achin� do�s not r�eet the needs af the City and staff has been working to review all department and City needs and has received bids and is in t�e process of evaluating th�m. The City's postage meier has an annual cost of $6,000 and was previously not zncluded in the budget, it has now been added to the budget. The Gover-nment Suildings budget was reduced substantially to more accurately reflect casts for utilities. An amount was budgeted for the increased cost for the Ramsey County Maintenance Facility lease as the cold storage will be converted to heated storage. The net effect is a$28,933 decrease to this budget. There is no Reserve/Contingency budgeted in the 20 � 2 budget as proposed. Other rx�.i�cellaneous adjustments includ�: an increase in the Mayor & Cou�cil budget for newsletter costs and txaining; increases in �ie Finance and Adminis�trative Services budget for Springbrook software maintenance costs and IT services from Roseville; incxease in �lie Streets budget for snowplowing ov�rtir�e based on the previo�s iwo-year hisiory; a reductian in emergency managerzaent costs; and aiher miscellaneous adjustrr�ents. Other Funds We have previously nated the changes to �he EDA Fund as costs have been moved from the General Fund to the EDA Fund. Staff is also recommending a transfer of $65,000 from the PIR Fund for the Gateway sig�s. There were no significant chariges to the oiher Special Revenue Funds with the exception of ihe Com�unity Services Fund being folded into the Public Safety Capital Fund. This is being done in part because of new accounting standards but also because the charitable gambling proceeds can only be used for public safery capital purchases, as a result, Council will be asked to formally dissolve this f�znd and move the baiance to the Public Saf�ty Capital Fund at a future Councii meeting. There ar� no significant change� to ihe Debi Service Fund. Capital �unds were discussed at our J�ne meeting during the Capital Improvemen� Plan (CIP) revzew. They will agai� b� brought back for discussion at our Novezx�ber worksession. Enterprise Funds have been evaluated and chan.ges made ta 2012 Rate Increases accurately reflect economic conditions and hisiorical trends. A updated rate study will be done and presented to the City Council at Water 7% the November worksesszon. The rates included in the proposed Sanitary Se+nr�r 2% budget are from the 2008 Rate Study. Surface Water 3% �►T -i�iit+7 City Council 2012 Proposed Preliminary Budget and T� Levy 9 GENERAL INFORMAT�ON A final levy is estabiished and certif ed in Decernber. As Council knows, once a preliminary levy is established, the amount can be reduced, but it cannot be increas�d. It should be nated tk�at the 3% levy increase provides no op�ortunity to build fund balances in capital f�nds {Park Fund, PIR/Capital, Public Safety). If Council desires an opportunity to discuss addiiional transfers to capital f�nds, you zx�ay wanf ta consider a higher preliminary tax levy. � �N HILLS CITY OF ARDEN HILLS COUNTY OF RAMSEY STATE OF MINNESOTA RE�OLUT��N NO. 2U1 X-045 A RESOLUTION SETTING THE PRELIMINARY LEVY FOR TA.XES PAYABLE �N 2012 BE IT RESOLVED by the Arden Hills City Couz�cil tka.at the iallow�ing proposed sums of mpney be levied for Ievy year 2011 payable in 2012 upon taxa�Ie property in said City of Arden Hills %r the �ollowing purposes: CERT�F�ED LEVY AMOUNT General Fund $3,�32,264 PASSED AND ADOPTED BY THE CITY COUNCIL QF THE C�TY QF ARDEN H�LLS THI� 12th DAY OF SEPTEMBER, 2011. DAVID GRANT, MAYOR ATTEST: PATRICK KLAERS, CITY ADMINISTRATOR _ _ __ _ _ . � tion A p Resolution 2011-046 __ __ CTTY OF ARDEN HILLS COUNTY OF RAMSEY STATE OF MINNESUTA RESOLUTION NO. 2411-046 RESOLUT�4N ADOPTING TRUTH IN TAXATION PUBLIC HEARING DATE FOR PROPOSED TAXES PAYABLE IN 2012 BE IT RESOLVED by the Arden Hill� City Council that the following Truth in Ta�ation Public Hearing date, time and place for proposed property iaxes payable in 2012 be certified ta the Ramsey County Auditor and that notice of the Public Hearing be published in accordance wi�h Minnesota Statute. Public Hearin� Date; December 5, 20ll Time: 6:00 P.M. Place: Council Chambers 1245 West Highway 96 PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF ARDEN HYLLS THIS 12��' DAY OF SEPTEMBER, 2011. DAVID GRANT, MAYOR ATTEST: PATR�CK KLAERS, CITY ADMINiSTRATOR _ _ __ _ _ _ _ _ _ __ .. ... 0 tion B p Resolution 2011-046 _ _ _ _ ... . .... ..... ......... .. .. _ __ _ _ C�TY OF ARDEN HILLS COUNTY OF RAM�EY STATE OF MINNESOTA RESOLUTION NO. 2011-046 RESOLUTION ADOPTING TRUTH �N TAXATION PUSLIC HEARING DATE FOR PROPOSED TAXES PAYABLE IN 20i2 BE IT RESOLVED by th� Arden Hills City Council that the following Tr�.rth in Ta�ation Public Hearing date, time and place for proposed property taxes payable in 2012 be certified to the Raz�asey Caunty Audrtor and tl�ai notice of the Public Hearing be published in accordance with Minnesota Statute. Public Hearin� Date: December 12, 2011 Time: 7:00 P.M. PEace: Council Chambers 1245 West Highway 96 PAS�ED AND ADOPTED BY THE CITY COUNC�L OF THE CITY OF ARDEN HTLLS THIS 12t�` DAY OF SEPTEMBER, 2011. DAVID GRANT, MAYOR ATTEST: PATRTCK KLAERS, CITY ADMINISTRATOR