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Home My WebLink About1995 12-09 City Council Special Meeting PacketAGENDA MAPLEWOOD CITY COUNCIL 9:00 A.M., Saturday, December 9, 1995 Council Chambers, Municipal Building Meeting No. 95 -26 Special Meeting A. CALL TO ORDER B. PLEDGE OF ALLEGIANCE C. ROLL CALL D. APPROVAL OF MINUTES NONE E. APPROVAL OF AGENDA F. CONSENT AGENDA NONE G. PUBLIC HEARINGS 1. 9:00 A.M.: Public Hearing on Proposed 1996 Budget and Taxes a. City Manager Comments b. Video Presentation of Proposed 1996 Budget c. Citizen Comments d. Council Discussion e. Determination of Need for Continuation Hearing Scheduled for 7:00 P.M. on Friday, December 15 f. Announcement of Hearing to Adopt the 1996 Budget and Taxes Payable in 1996: 7:00 P.M. on December 18 in Council Chambers H. AWARD OF BIDS NONE I. UNFINISHED BUSINESS NONE J. NEW BUSINESS NONE K. VISITOR PRESENTATIONS L. COUNCIL PRESENTATIONS 1. 2. 3. 4. M. ADMINISTRATIVE PRESENTATIONS 1. 2. 3. N. ADJOURNMENT AGENDA NO. � ^ / AGEN V DA REPOR 1 TO: City Manager FROM: Finance Director .7 - A�ut��l RE: PUBLIC HEARING ON PROPOSED 1996 BUDGET AND TAXES DATE: December 6 A public hearing on the proposed property taxes and budget for 1996 has been scheduled for December 9 at 9:00 a. m. in the Council Chambers. Attached is a copy of the handout that will be distributed to citizens that attend the hearing. At the beginning of the hearing a video presentation of the proposed budget will be shown. Then citizen comments will be received. If additional time is needed for citizen comments, the hearing has been scheduled to reconvene at 5:00 p.m. on December 15. The date, time and place for the continuation hearing must be announced prier to adjournment of the public hearing on December 9. If additional time is not needed for citizen comments, a motion should be passed to cancel the scheduled continuation hearing. State later requires that cities must adopt their 1995 budget and final property tax levy for ta payable in 1995 at a subsequent public hearing. Therefore, another public hearing has been scheduled for December 18 at 7:00 p.. in the Council Chambers. The date, time and place for the December 12 hearing must also be announced prior to adjournment of the public hearing on December 9. P :1F 1NANCE\WP\AGN1s6PR0P. TAX. CITY OF MAPLEWOOD 1996 PROPOSED PROPERTY TAXES Fm 1996 PROPOSED BUDGET PUBLIC HEARING DECEMBER 9,1995 HOW YOUR PROPERTY TAXES ARE DETERMINED Box 1 Total Proposed Local Budget - minus Box 2 All Non-Property Tax Revenue, e9: " State Aid * Fees, etc. = equals Box 3 Property Tax Revenue Needed (Levy) divided by F ssessor's arket Value X times Box 5 State Mandated = equals Box 6 Total . ' 'Tax capacity" (Formerly Assessed Value) = equals F Tax Property Tax Rate Capacity" Rate) YOUR PROPERTY TAX = Your Property's Market Value X Class Rate(s1 X " Tax Capacity " Rate Source: "Understanding Your Property Taxes. 1994 Edition." Minnesota Taxpayers Association, p. 6 FORMULA FOR 1995 PROPERTY TAXES Step 1 - Calculate Tax Capacity MARKET X STATE .HOMESTEAD VALUE FORMULA $125,000 $ 72,000 X .01 = $ 720 .$ 53 f 000 X .02 = $1,060 $125,000 Sten 2 - Calculate Tax Based on Tax Capacity; TAX TAX X CAPACITY RATE $1,780 130.053 ten 3 --Calculate Tax Based on Market Value; MARKET X STATE HOMESTEAD VALUE FORMULA $125,000 0.027 . Step 4 - Calculate Total Tax TAXES BASED + TAXES BASED ON TAX CAPACITY ON MARKET VALUE $2,314.94 $33.75 TAX CAPACITY $ 720 1 060 $1, 780 PROPERTY TAX $2,314.94 TAX CAPACITY $33.75 TOTAL TAX $2,348.69 P: \FINANCE \WP \BUDDOC \BDGTHEAR. NOT ESTIMATED 1996 CITY PROPERTY TAX CHANGES TAX RATE CHANGE S Estimated Payable 1995 Payable 1996 Percent Local Tax Rate Local Tax Rate Change Tax rate on tax capacity Tax rate on market value for open 21.560% 20.860% -3.2% space bonds 0.031% 0.027% -12.9% PROPERTY TAX CHANGES ON HOMES Estimated Market Tax Percent Value * Capacity Tax Decrease Decrease $ 70,000 $ 700 $ 165 $3 1.8% 88 1,044 242 1 0.4% 100,000 1,280 294 2 0.7% 120,000 1,680 382 4 1.0% 140,000 2,080 472 4 0.8% 160,000 2 560 6 1.1% *The values listed for 1996 are 2.4% more than 1995 which was the average change according to the Ramsey County Assessor's Office. **Average value home in Maplewood P:\F1NANCEkWPkBUDDOCkBDGTHEAR. NOT TAX APPEALS AVAILABLE The only way at this time that property owners can appeal their property values is by filing a petition for review with tax court by March 31, 1996. The Tax Court has two divisions - the regular division, whose decisions may be appealed, and the small claims division, whose decisions are final. If the property is homestead, the appeal can be made to either division. Property owners were previously given the opportunity to appeal their values when value notices were mailed in March or at the County Board of Equalization in June. The only other way that 1996 taxes can still be changed is by reducing the property tax levy itself. By attending the TNT hearing, taxpayers can recommend reductions in each taxing authority's 1996 tax levy. PROPERTY TAX RELIEF The legislature provides several different types of property tax relief. The homeowner's and renter's rebates are given to taxpayers whose property taxes are disproportionate to their income. More importantly, a targeting refund is available for homeowners whose taxes increase by more than 12% from the prior year. No income limits apply to this refund. Property owners file for the refunds using state form M1 -PR which is sent out with state income tax instructions. The M1 -PR form can also be obtained at post offices, libraries and most banks or by calling 296 -3781 (24 hours /day) or by writing to: Minnesota Tax Forms Mail Station 7131 St. Paul, MN 55146 -7131 P: \FINANCE \WP \BUDDOC \BDGTHEAR. NOT / CITY OF 1Vl��PLEVUOOD 1830 E. COUNTY ROAD B MAPLEWOOD, MINNESOTA 55109 FINANCE DEPARTMENT 612-770-4510 July 30, 1995 Honorable Mayor and Council Members: I am pleased to transmit the 1996 Proposed Budget for the City of BUDGET Maplewood which was adopted on December 18, 1995. The budget AWARD document includes detailed performance objectives for each department. The remaining parts of the document are in a format similar to the 1995 Budget which received the Award for Distinguished Budget Presentation from the Government Finance Officers Association of the United States and Canada. It is hoped that the format of this document and the information contained within it will clearly communicate the City's 1996 financial plans and provide an operations guide for all City departments. The Budget is divided into three sections: Operations, Capital Improvements, and Debt Service. Within the Operations section, the basic focus is on 1996 performance objectives for each department and the planned expenditures to accomplish the objectives. The focus of the Capital Improvements section .is the construction projects planned for 1996. The Debt Service section focus is on the scheduled bond issue principal and interest payments due in 1996. The mission statement of the City of Maplewood is "to provide high- quality OBJECTIVES and cost effective public services". The major objectives of the 1996 Budget are designed to help the City accomplish this mission. These budget objectives include the following: no increase in the property tax levy, add a full-time police officer to increase the level of police services, implement recreation programs at the new Carver and Edgerton community gymnasiums and maintain the level of services provided by all other departments. Other major objectives are listed on page 2 -1 and objectives for each department are listed in Section 3. Equal Opportunity Employer The Cit Y 's tax levy for 1996 is $8,572,900 which is the same as 1995. NO Approximately A roximatel 77 % of the total levy is for Operations financed by the General Fund. The remaining 23 % of the levy is for TAX LEVY debt service costs on INCREASE bond issues. The debt service portion of the tax levy for 1996 is $227,600 FOR 996 higher than 1995 due to higher principal and interest payments on bonds. 1: g This increase is offset in 1996 by a decrease of $209,600 in the tax levy for the General Fund and elimination of a $18,000 tax levy for the capital improvements. CITY RECEIVES 16 % OF TAXES In 1995 the City received 16.0 % of the property taxes on property within the City. It is anticipated that this rate will not change significantly in 1996. The followin g indicates the allocation of property tax dollars by government type: I� 1 G'67 AIR r , G957 4698X 7 joss in..wwni i. /W.4. - .,.� —, ,YI{/{YIIIL11111h .1 D o * -1 3 Dow T 1.1 on is uwnlim OK FOR , STS. /YSLK AND P*#VATE 1 1 1 G 95704698 X 4 WAS11INGrON.l).t;. 4.5% 16.0% 29.9% 49.6% Other city County Schools It should be noted that the above data is for property in Maplewood that is located within School District 622. 1 -6 1996 EXPENDITURES BUDGET $ 34.4 MILLION Revenues and expenditures for the 1996 Budget as a whole decreased over the 1995 Budget. REVENUES AND EXPENDITURES BY SECTION Comparison of 1995 and 1996 Budget REVENUES EXPENDITURES Amount Change Amount Change Operations $20,460,730 N/A $20,746 - 0.4% Capital Improvements 3 - 4.5% 5 -27.6 Debt Service 2,366,080 + 0.1 8 + 32.1 Totals $ 26,1.24, 930 1 - 0.6% J1 $34,411,080 - 0.3% The difference between total revenues and expenditures will be financed by the use of surplus fund balances and bond issues. OPERATING BUDGET This portion of the budget covers basic City services such as police, firefighting, street maintenance, recreation programs, park maintenance, planning, building inspections and utility maintenance. The expenditures for the funds within this portion of the budget are grouped by department and subdivided into divisions for each department. Budget performance is measured based on the accomplishment of the objectives for 1996 listed for each department and by the percentage of budgeted expenditures that are spent. Operating budget revenues for 1996 are only $830 less than 1995. The OPERATING revenue category with the largest decrease is property taxes which are BUDGET down $337,970 due to the decrease in the tax levy for the operating REVENUES budget. Intergovernmental revenues are up $248,870. Most of this is due DOWN $830 to a change in the accounting for state HACA payments. Previously HACA was allocated to all funds in proportion to their tax levy. Beginning in 1996 all HACA will be allocated to the General Fund to simplify accounting. Revenues in the charges for service category include a planned increase in ambulance rates effective January 1, 1996 as indicated in the following table. 1 -7 AMBULANCE RATES UP 6.3% The 1996 ambulance rates are based upon the average 1995 ambulance rates charged by other providers. The increase in rates will produce additional revenues of approximately $41, 000. Despite the large increase in rates, there still will be a 15.9% property tax subsidy for paramedic services. Operating budget revenues for 1996 produced by utility service charges UTILITY RATES will total $4,233,990 which represents 20.7% of the total revenues. Utility UP 5.4% service charges consist of water service charges, hydrant charges, sewer service charges and recycling charges. It is planned that Maplewood will start billing water service charges on October 1, 1996, and the initial rates will be the same as the rates charged by the City of St. Paul. (This is provided a new water agreement to continue the present retail arrangement is not executed.) After Maplewood has operated the water system for at least one full year, the water rates will be adjusted based upon Maplewood expense data. At that time, consideration will be given to the possible discontinuance of the Maplewood hydrant charge. Sewer rates will need to be increased by $1.70 per quarter to finance the 1996 Budget. The last sewer rate increase was January 1, 1993. 1 -s AMBULANCE RATE INCREASES Increase 1995 1996 Amount Percent Basic life support: Resident $ 240 $ 255 $ 15 6.3% Non - resident 265 280 15 5.7 Advanced life support: Resident: 465 495 30 6.5 Non - resident 510 545 35 6.9 Charge per mile 7.10 7.20 0.10 1.4% The 1996 ambulance rates are based upon the average 1995 ambulance rates charged by other providers. The increase in rates will produce additional revenues of approximately $41, 000. Despite the large increase in rates, there still will be a 15.9% property tax subsidy for paramedic services. Operating budget revenues for 1996 produced by utility service charges UTILITY RATES will total $4,233,990 which represents 20.7% of the total revenues. Utility UP 5.4% service charges consist of water service charges, hydrant charges, sewer service charges and recycling charges. It is planned that Maplewood will start billing water service charges on October 1, 1996, and the initial rates will be the same as the rates charged by the City of St. Paul. (This is provided a new water agreement to continue the present retail arrangement is not executed.) After Maplewood has operated the water system for at least one full year, the water rates will be adjusted based upon Maplewood expense data. At that time, consideration will be given to the possible discontinuance of the Maplewood hydrant charge. Sewer rates will need to be increased by $1.70 per quarter to finance the 1996 Budget. The last sewer rate increase was January 1, 1993. 1 -s Also, the recycling charges will have to be increased by $.55 per quarter. The following table summarizes the proposed utility rate increases for an average home. The 18 % increase in the recycling charge rate is needed because expenses have been increasing faster than revenues (see page 3 -94). Recycling charge rates were raised January 1, 1995 by $1.25 per quarter. Operating budget expenditures for 1996 are $20.7 million and 0.4 % lower OPERATING than 1995. The largest decrease is in the Water Fund which is down BUDGET $1 100. This is due to the delay in Maplewood assuming EXPENDITURES responsibilities from St. Paul for the operation of the Maplewood water DOWN system. Originally the change was scheduled for July 1, 1995, but now 0.4% has been delayed to October 1, 1996. This will allow time to negotiate a new agreement to continue the present retail arrangement. However, the 1996 Budget assumes that the negotiations will not be successful and that the change in responsibilities will occur October 1, 1996. If the Water Fund had been excluded from the 1995 and 1996 budgets, the 1996 expenditures would be 5.0% higher than 1995. Over a third of this increase is due to Community Center, operating expenses. If the Community Center Fund had also been excluded from the 1995 and 1996 budgets, the 1996 expenditures would be 3.3 % higher than 1995. Our annual population increases in 1992, 1993 and 1994 were 1.7%, 1.5 % , and 1.6 % respectively. The 1995 population estimate which will be released next year will probably be more than a 1.6 % increase because building permits were issued in 1994 for 275 new housing units. 1 -9 PROPOSED UTILITY RATE INCREASES IMPACT ON AN AVERAGE HOME Quarterly Charge Increase 1995 1996 Amount Percent Water (hydrant $3.70 $3.70. $ 0 0% charge) Sewer service 34.90 36.60 1.70 4.9 Recycling charge 3.05 3.60 .55 18.0 Total $41.65 $43.90 $2.25 5.4% The 18 % increase in the recycling charge rate is needed because expenses have been increasing faster than revenues (see page 3 -94). Recycling charge rates were raised January 1, 1995 by $1.25 per quarter. Operating budget expenditures for 1996 are $20.7 million and 0.4 % lower OPERATING than 1995. The largest decrease is in the Water Fund which is down BUDGET $1 100. This is due to the delay in Maplewood assuming EXPENDITURES responsibilities from St. Paul for the operation of the Maplewood water DOWN system. Originally the change was scheduled for July 1, 1995, but now 0.4% has been delayed to October 1, 1996. This will allow time to negotiate a new agreement to continue the present retail arrangement. However, the 1996 Budget assumes that the negotiations will not be successful and that the change in responsibilities will occur October 1, 1996. If the Water Fund had been excluded from the 1995 and 1996 budgets, the 1996 expenditures would be 5.0% higher than 1995. Over a third of this increase is due to Community Center, operating expenses. If the Community Center Fund had also been excluded from the 1995 and 1996 budgets, the 1996 expenditures would be 3.3 % higher than 1995. Our annual population increases in 1992, 1993 and 1994 were 1.7%, 1.5 % , and 1.6 % respectively. The 1995 population estimate which will be released next year will probably be more than a 1.6 % increase because building permits were issued in 1994 for 275 new housing units. 1 -9 The City's 1994 population estimate was 32,903 which makes Maplewood the second largest suburb in Ramsey County. Population. growth requires budget increases in excess of the inflation rate in order to maintain the present level of City services. The number of full -time employees included in the 1996 Budget is 143. + 5 FULL -TIME This is an increase of 5 positions. The breakdown by department is as EMPLOYEES follows: + 1 General Government — The two part -time management information systems coordinator positions were revised to One full -time position. +3 Parks and Recreation — Four part -time recreation assistant positions were converted to three full -time positions. + 1 Public Safety — One police officer was added with funding from the federal government. Also, a Fire Chief position has been added and the deputy fire marshal position has been deleted. 55% O F Approximately 55 % of the Operating Budget is accounted for in the City's OPERATING General Fund. Revenues projected for 1996 will be 0.9 % higher than the BUDGET IN 1995 Budget. Expenditures will be 2.8% higher in 1996 than the 1995 GENERAL FUND Budget. As a result, in 1996 expenditures will exceed revenues by $751,720 which is referred to as a deficit budget. Transfers to other funds will increase this deficit to $978,620. The deficit will be financed by using part of the surplus fund balance. The 0.9 % increase in General Fund revenues amounts to $96,070. The GENERAL FUND largest increase is in intergovernmental revenues and is due to the change REVENUES in accounting for state HACA payments. In 1996 property taxes will be UP 0.9% 47% of total revenues for the General Fund. This is a small decrease from 1995 when property taxes were 51 % of the revenues. 1 -10 Department expenditure requests for the General Fund were 4.5 % higher GENERAL FUND than the original 1995 Budget. The 1996 Budget includes recommended PER CAPITA expenditures that are 2.8% higher than the 1995 Budget. This 2.8% EXPENDITURES increase in expenditures is reasonable compared to a combined projected UP 1.3% inflation rate of 11 % and growth rate of 1.5 %. On a per capita basis, General Fund expenditures will increase by 1.3% as indicated in the following table: GENERAL FUND EXPENDITURES 1995 1996 Percent hangs. Expenditures $11,173,790 $11,490,230 2.8% Population 33,397 33,898 1.5% Per capita expenditures for General Fund $335 $339 1.3% An analysis of the General Fund cash flow for 1993 and 1994 indicated that GENERAL FUND the 12 -31 -96 fund balance should be 25.7% of the expenditures to finance BALANCE cash flow needs. Compared to the budgeted 12 -31 -95 fund balance at 31.6 p g WILL the 25.7 % required fund balance is a decrease of 5.9 %. A sudden decrease INCREASE in the General Fund balance b 5.9 % could have a negative impact on the y g P City's bond rating. Therefore, it is recommended that the balance be reduced gradually over 10 years and that the planned reductions be reconsidered annually. The proposed 1996 General Fund budget has the fund balance at 31.8% of the expenditures which is a 0.2% increase. The balance should be gradually reduced beginning with the 1997 Budget. This portion of the budget covers the acquisition and construction of major facilities other than those financed by the Operating Budget. The revenues and expenditures within the Capital Improvements Budget are grouped by fund. The money within each fund is restricted for use to acquire and construct only major facilities. All other capital. outlay is financed within the Operating Budget. The 1996 Budget implements the first year of the 1996- 2000 Capital Improvement Plan adopted by the City Council on May 22, 1995. 1 -11 Revenues for 1996 in the Capital Improvements Budget are $155,990 and CAPITAL 4.5 % less than 1995. This decrease is caused primarily by a decrease in state IMPROVEMENTS street construction aid to finance improvement projects. Major revenue REVENUES sources for the 1996 Capital Improvement Budget are tax increment revenue DOWN 4.5% o ( street construction state aid ($820,000), and $1,000,000 from Ramsey County for a joint public improvement project (i.e. installation of turn lanes on white Bear Avenue between County Road C and !694). Capital Improvement Budget expenditures planned for 1996 include public CAPITAL improvement projects ($2,385,000), open space land acquisitions ($500,000), IMPROVEMENTS park development ($686,000), replacement of the Gladstone Fire Station EXPENDITURES ($1,300,000), expansion of the Public Safety garage ($295,000) and the DOWN continuance of the street overlay and sealcoating program ($100,000). The 27.6% impact of these items on operating costs has not been determined. Total 1996 expenditures are $2,035,120 and 27.6% less than 1995. This portion of the budget covers the payment of principal and interest on the DEBT City's bonded indebtedness. Each bond issue has a separate debt service SERVICE sinking fund. REVENUES UP 0.1 % Revenues for 1996 are 0.1 % more than 1995 primarily due to an increase in property taxes. Major revenue sources, as in past years:, are property taxes ($1,945,960), special assessments ($357,720), and interest on investments ($62400). Expenditures for 1996 are 32.1 % more than 1995. The large increase is DEBT caused by $4,720,000 of prepayments on bonds being refinanced at a lower SERVICE interest rate. If these large prepayments were not included in the 1995 and EXPENDITURES 1996 Budgets, debt service expenditures would be 30.0 % less in 1996. The UP 32.1 % anticipated new debt issues for 1996 consists of (a) a $1,595,000 bond issue for replacement of the Gladstone Fire Station and a Public Safety garage addition which is being considered for a 1996 referendum and b) a $675,000 bond issue for public works improvements. At the end of 1996, general long- term net debt payable will be $29,755,000 which is $5,000 less than projected for the end of 1995. 1 -12 Operating Budget increases in the future will continue to exceed the inflation FUTURE rate because of population growth and increases in commercial development. GROWTH The City has experienced slow steady population growth since 1980. WILL IMPACT Average annual population increases between 1980 and 1990 were 1.5 %. The OPERATING City's latest population estimate is 32,904 for 1994 according to the BUDGET Metropolitan Council. This represents a 1.6% increase over 1993. It is anticipated that population growth will continue at the same rate for the next several years. In 1994 the City issued building permits with a total valuation of $50.6 million. In 1993 the City issued building permits with a total valuation of $58.9 million. The value of permits for residential construction was 19.1 % lower than 1993. Permit values for 1994 non - residential construction were 10.9 % less than 1993. Based on projections in the 1996 -2000 Capital Improvement Plan, the Capital CAPITAL Budget will decrease from $6.6 million in 1996 to $3.6 million in 2000. IMPROVEMENT Major factors affecting the capital budgets will be (a) the referendum for EXPENDITURES replacement of the Gladstone Fire Station in 1996, (b) the number of public WILL improvement projects that are approved for construction and (c) the DECREASE referendum in 1999 for park improvements. Bond issues to finance the 1996- 2000 Capital Improvement Plan total $7,695,000. Conserving the financial resources of the City continues to be important. CONCLUSION The budgeting function is the prime tool you have to make sure the City's limited resources are wisely utilized and to establish department objectives for the coming year. We continue with the objectives of making Maplewood an affordable place to live while providing the services that make it a good place to live. The Council's cooperative effort in the review and adoption of the 1996 Budget will be greatly appreciated. I would also like to express my appreciation to all City personnel who assisted in the preparation of the 1996 Budget. Michael A. McGuire City Manager 1 -13