2020-09-23 CC Packet - Laserfiche WebLink

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We have gone through the individual department budgets in detail. We have incorporated prior year spending adjustments and made additional estimates of budget adjustments for each line item based on actual or expected price changes. This levy change of $23,697 represents an increase of 0.87% over the 2020 tax levy. If this levy is adopted on a preliminary basis, it may be reduced, but not increased when the final levy is adopted in December. With the new property value that is coming online from Ruffridge Johnson and other new construction, this will undoubtedly result in a tax increase of less than 1%, possibly approaching zero tax change, on the average home in Centerville. This budget is responsible in both the long and short term. We have built in a contingency of $50,000 for our capital projects. If not needed for our capital projects, those funds can cover short-term drops in property tax payments if residents are unable to make their payments on time. $50,000 would cover a more than 2% delinquency rate. Staff has not seen property tax collections drop below 97% for a city in 30 years of boom and bust cycles. We have healthy reserves in our General Fund, Water Fund, and Sewer Fund. These reserves can be used wherever necessary as determined by the City Council. Our cash flow forecast is designed to ensure money is in our bank account when needed. We have reviewed investment maturities and the timing of expenditures and receipts to make sure need to sell investments at a loss to cover our cash flow needs. We have addressed many of the concerns recently identified by the League of Minnesota Cities. We reduced our anticipated proceeds from building permits and pull-tab gambling receipts. We have conservatively budgeted for interest income at 1% of our cash balances. While short-term rates have dropped below that amount, our current investments are staggered out with maturities coming due over the next five years. Our portfolio should maintain a return within a reasonable margin of error of 1% over the next several years. Lastly, we are not highly dependent on Local Government Aid (LGA) from the state. Even a 20% decrease in this $75,626 aid represents only about a $15,000 revenue loss. Staff is happy to discuss budget issues and answer questions at any time with council, property owners, and residents. After this preliminary adoption, staff will bring back a full budget for review prior to the Truth-in-Taxation hearing on December 9, 2020.