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HomeMy WebLinkAbout[05-00] Budget Council Agenda Item \[05\] MEETING DATE: December 5, 2016 AGENDA ITEM: Public Hearing - 2017 Final Budget/Levy/5-year Capital Plans SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: The EDA, Fire Board and Park Board met to recommend their respective 2017 budgets and fees. PREVIOUS COUNCIL ACTION: City Council adopted the preliminary 2017 levy on September 19, 2016. The Council also set December 5, 2016 at 6:00PM as the public hearing date for the payable 2017 levy and budget. The Council reviewed fees, enterprise budget and capital plans in November. BACKGROUND INFORMATION: Stearns County mailed proposed 2017 property tax statements to taxpayers in November 2016 based on the preliminary levy set by Council in September. Based on the preliminary levy, the following table shows the net tax capacity compared to 2016. Also included is the impact on a $150,000 homesteaded residential and a $500,000 business properties. Please note the general levy includes $162,000 (versus debt levy) for the tax abatement bonds issued for the Community Center. The certified levy will classify this dollar amount as debt levy, but in fact will be used as general levy. The Community Center bonds will be paid for with the local option sales tax receipts. NTC $3,389,637 Adopted 2016 Levy Proposed 2017 Levy 1.41% ↑ $1,247,430 37.32% $1,313,485 38.75% General Levy $591,375 17.69% $689,435 20.34% Debt Levy $1,838,805 55.01% $2,002,920 59.09% Total $695 $746 $51 ↑ 150,000 Home $5,088 $5,466 $378 ↑ 500,000 Business Governmental Funds: According to MN Statutes the City must hold a public hearing on their proposed total budgets and proposed property tax levies for the taxes payable in 2017. The public hearing may be part of the City’s regular scheduled meeting. The final 2017 levy and budget must be adopted by December 28, 2016. In September the City Council announced the meeting place and time the proposed final budget will be discussed and public allowed to speak as the council chambers on Monday, December 5, 2016 at 6:00pm. th Taxpayers received their proposed property tax statements from Stearns County around November 15. The tax statement is based on the preliminary levy set in September. The preliminary levy increased 8.9%, a 4.08% tax rate increase for the City portion. The spreadsheet below shows the tax rates of the area cities and jurisdictions part of the St. Joseph tax statement for 2016 and 2017 based on the preliminary levies. The City of St. Joseph’s levy represents the final proposed levy. Also included is the effect on a $150,000 homesteaded residential and $500,000 business properties. The orange letter represents the jurisdictions that effect St. Joseph residents. Although the city portion of taxes increased, 2017 RESIDENTIAL PROPERTY TAX ALLOCATION 1%DistrictSauk River Watershed 23%St. Cloud Schools40%City of St. Joseph36%Stearns County other jurisdictions decreased their levies to offset the city increase. There is virtually no change in the overall property taxes due from St. Joseph taxpayers based on the preliminary levies. 2016 Tax Proposed Final Effect on Effect on $500K Rate 2017 Tax Rate Difference $150,000 Home Business $51.52 ↑ $377.34 ↑ City of St. Joseph 55.01% 59.09% 4.08% Stearns County 51.68% 52.16% 0.48% $6.06 ↑ $44.40 ↑ St. Cloud Schools 38.11% 34.18% -3.93% $49.64 ↓ $363.53 ↓ Sauk River Watershed 1.35% 1.29% -0.06% $0.76 ↓ $5.55 ↓ State of Minnesota 0.95% 0.92% -0.03% n/a $2.78 ↓ City of St. Cloud 55.97%* 55.75%* -0.22% $2.78 ↓ $20.35 ↓ City of Sauk Rapids 46.41% 48.08% 1.67% $21.09 ↑ $154.47 ↑ City of Waite Park 72.48% 72.34% -0.14% $1.77 ↓ $12.95 ↓ City of Sartell 40.61% 41.09% 0.09% $6.06 ↑ $44.40 ↑ Note: * City of St. Cloud’s tax rate includes voter referendum for street maintenance. The pie chart shows the allocation of the property tax bill for a St. Joseph resident. As depicted on the chart, three jurisdictions have the largest impact to changes in the property tax charges. The City of St. Joseph has the largest piece of the pie followed closely by Stearns County. The St. Cloud School District is roughly a quarter of the tax impact. The main increase for the city’s portion of taxes was the debt levy. The government center bonds account for the main increase in the debt levy. The general levy increased for capital equipment purchases (cut 25% in 2016), park board funding, EDA programming (cut in 2016), full time police officer hired mid- year, recreation director and staff hours for the community center, fire department funding, and staff general wage/salary increase of 2.75% as adopted in the union contracts. The graph on the following page shows the 10-year history of the City’s certified levy per capita. The proposed 2017 levy is closer to levels from the mid-2000s. The reductions the past few years were the result of small population increases and council’s effort to minimize the tax impact following the Great Recession. The increase in 2017 is mainly from the debt service levies. $186 General LevyPer CapitaLevyDebt ServicePer Capita Certified Levy Per Capita 2017201620152014201320122011201020092008 $350 $300 $250 $200 $150 $100 $50 $-$102 $87 $68 $69 $67 $76 $78 $87 $104 $102 $194 $183 $183 $184 $195 $178 $211 $208 $195 According to MN Statutes the City must adopt a final budget for payable 2017 and certify its property tax levy for payable 2017 to the county auditor on or before December 28, 2016. The final levy cannot be higher than the adopted preliminary levy of $2,002,920. The proposed final levy supports an operating budget of $2,975,155. The proposed final 2017 levy breakdown is as follows below: General Levy $1,313,485 Debt Levy $689,435 Total Levy $2,002,920 Homeowners Resources: Residents of St. Joseph may be eligible for direct property tax relief based on one of the following three programs in State Statutes: Homestead Credit Refund, Renter’s Refund and Specialty Property Tax Refund. The programs are explain in more detail on the Minnesota Department of Revenue website. A summary of each follows below. Note, property owners must file for homesteading on their permanent th residents with Stearns County by December 15 for homeowners who have not yet filed for homesteading. The Homestead Credit Refund program provides a refund to homeowners when their property taxes exceed a certain percentage of the household’s income. The 2013 State Legislation made it possible for more homeowners to be eligible for the refund. Homeowners whose income exceeds $107,150 are not eligible for the refund (2014 amount, 2015 not available). The refund can be claimed on the Minnesota tax form M1PR which is filed separately from the individual income tax form filed in the spring/summer. The Renter’s Refund is a state-paid refund that provides tax relief to renters whose rent and implicit property taxes are high relative to their incomes. The program assumes 17% of rent paid is “rent constituting property taxes”. If the 17% exceeds a threshold percentage of income, the renter is eligible for a refund. Renters will use Minnesota tax form M1PR. The Special Property Tax Refund program, also referred to “targeting program,” directs property tax relief to homeowners who have large property tax increases from one year to the next. There is no income component to this program. A homeowner qualifies if the property tax on the home has increased by more than 12% and over $100 from the previous year. The refund can be claimed on Minnesota tax form M1PR. New in 2015, the League of Minnesota Cities provides information to property owners and renters on the Minnesota Property Taxes. Go to link http://www.lmc.org/page/1/specialdeliveryvid.jsp for more information. Enterprise Funds: Also included in the proposed 2016 budget are the enterprise funds and 5-year capital improvement plans (CIP). The enterprise funds include water, sewer, refuse/compost, storm water and street light utilities. The budget for the enterprise funds includes operations (including depreciation), capital outlay and debt service costs. The enterprise funds operate similar to a private business where rates should cover full operational costs, including debt and depreciation. For many municipalities, it is very difficult to cover 100% of the depreciation due to the high costs and regulations to operate the funds. The City Council set a goal to try to reach 100% to assist with future infrastructure costs. The debt service in the water and sewer funds anticipated growth rates seen in the mid-2000s, before the Great Recession. Although the City is not growing as anticipated, St. Joseph is slowly adding development. The development will help keep additional rate increases down. Some of the proposed upcoming projects include Bayou Blues and Alley Flats, Jasmine Court, Graceview Estates Plat 5, Rivers Bend Plat 3, O’Reilly’s Auto Parts, CSB developments. Also, both the 2016 senior housing developments were allowed to tier out their utility connection fees. The fees will be collected in 2017 and 2018. These are exciting potential projects for the City and will greatly enhance the landscape. In October 2015, the City Council approved hiring a consultant to review the water and sewer fees. Both funds have significant costs and struggling to breakeven. The results of the rate study was presented in December 2015 with a follow up review in February 2016. The recommendations from Carl Brown Consulting are included in the proposed final budgets where the fees are only covering current expenses. The utility fees for the other enterprise funds are recommended to stay the same. By doing so, reserved equity balances may be used to cover some expenses for the year. Using reserves in the other funds versus fee increases will reduce the impact of water and sewer rate increases. The fee schedule will be reviewed as a separate agenda item. The charts on the next page show the 5-year trend of operational coverage in each fund. The water and sewer funds appear to be healthy without depreciation. When depreciation is added, the sewer fund does not breakeven. The sewer budget (and related fees) are set up to currently just break even without depreciation. Water has been recovering with the rate increases the past couple years along with small levies to help offset the bond payments. The Storm Water, Refuse and Street Light Utility funds are shown as deficits. The adopted rates in these funds do not fully cover operations. The deficits will be covered by the equity remaining balances in the funds. (100,000)street lights*storm waterrefusesewerwater Enterprise Coverage With Depreciation 2017+2016+201520142013 100,000 - (100,000) (200,000) (300,000) (400,000) (500,000)street lights*storm waterrefusesewerwater Enterprise Coverage Without Depreciation 2017+2016+201520142013 500,000 400,000 300,000 200,000 100,000 - Chart symbols: + Indicates the numbers are based on budgeted numbers, not audited. * Indicates no assets are being depreciated in this fund. Capital Improvement Plan: The 5-year CIP includes future projects. The City uses the 5-year plan to keep levy fluctuations to a minimum by putting funds aside each year to fund improvements. Projects are reviewed each year for priorities. The City tries to tier out the projects to avoid spikes in debt issues and leveling out the debt levy. The capital financial plan also keeps debt rates lower for the City. Project funding includes debt levy, special assessments, utility rates, half cent sales tax, Municipal State Aid (MSAS), federal and state aids, and unspent equity. The proposed priority projects for ’17 -‘19 are included in the table below and on the next page. These projects have not been ranked by the Council, rather they are projects that have been discussed previously by the Council. 2017 Projects 2018 Projects 2019 Projects First Ave NE CSAH 2 Trail, Phase II/III Millstream Park Improvements CBD Alley Improvements Northland Drive SW Trunk Water/Sewer phase 1 Improvements Extension stthth CIPP Improvements 1 17 & 18 Ave th Ave NE Improvements 16 Ave Improvements 2017 Projects 2018 Projects 2019 Projects Baker Street Lift Station Monument Park Generator Improvements East Park Development WTP1 Filter Media and Pedestrian Crossing Study – Tank Reconditioning CSAH 75 Jade Road Improvements Minnesota Street Community Center Resurfacing Improvements Gateway Business Center Minnesota Street Wobegon Trail Extension to CR121 Lift Station Beautification Updates St. Cloud/Parking Lot Generator Millstream Park Shelter, Dog Park, Play Equip Industrial Park Expansion St. Cloud NR2 Biosolids Welcome Monument Signs Capital Equipment Plan: The 5-year CEP includes the general equipment purchases and replacements. The City uses the 5-year plan to keep levy fluctuations to a minimum by putting funds aside each year to fund equipment. Part of the CEP are two equipment certificates. The certificates are 5-year issues for approximately $265,000 and $165,000. The certificates offset large spikes for more expensive equipment. The next certificate will be issued in 2018 followed by 2020. The table below are the 2017 planned purchases for each department. 2017 2017 Public Administration 2017 Police Works 2017 Fire 2017 EDA Comp Plan Update Squad 701 Seal Coat Turnout Gear BFA Grants GASB Updates 701 Safety Equip Extrication Equip Let’s Go Downtown Grass Rig #3 800MHz Radios Pagers Setting the final budget/levy requires a simple majority; however if the budget is amended once it is adopted, a super majority vote is needed. BUDGET/FISCAL IMPACT: See attached revenue/expenditures budget summaries ATTACHMENTS: RCA: Public Hearing – 2017 Final Budget/Levy/5-Year CIP/CEP Resolution 2016-059 – Adopting Final 2016, Payable 2017 Tax Levy 2017 Net Tax Capacity 2017 Proposed Final General Revenue Budget 2017 Proposed Final General Expenditure Budget Summary 2017 Proposed Final Fire Revenue Budget 2017 Proposed Final Fire Expenditure Budget Summary 2017 Proposed Final Enterprise Revenue Budget 2017 Proposed Final Enterprise Expense Budget Summary 2017 Debt Levy Summary 2017 Capital Improvement Plan Summary 2017 Capital Equipment Plan Summary REQUESTED COUNCIL ACTION: Adopt Resolution 2016-059 – Adopting the Final 2016, Collectible 2017 Tax Levy and Approve Final 2017 Budgets and Capital Improvement/Equipment Plans.