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HomeMy WebLinkAbout1996 12-05 City Council PacketP� AGENDA MAPLEWOOD CITY COUNCIL 6:30 P.M., Thursday, December 5, 1996 Council Chambers, Municipal Building Meeting No. 96-24 :a a 19, all e : _ A �� ► . _ ►t: t G. PUBLIC HEARINGS 1. 6 :30 P.M.: Proposed 1997 Budget and Taxes a. Manager Comments b. Video Presentation of Proposed 1997 Budget c. Citizen Comments - d Council Di scussion e. Determination of Need for Continuation Hearing Scheduled for 6:30 P.M. on Thursday, December 12.. f. Announcement of Hearing to Adopt the 1997 Budget and Taxes Payable i 1997 NONE NOME NEEI�I- NONE 1LI�_I 1._ 2. M. ADMINISTRATIVE I -ITAT I C S 1. 2. AGENDA NO. &owl AGENDA REPORT T0: City Manager FROM: RE: DATE: Finance Director AM1tr11A-- Act I on by Council Endorse Modified. Rejected Date PUBLIC HEARING ON PROPOSED 1997 BUDGET AND TAXES November 27, 1996 A public hearing on- the proposed property taxes and budget for 1997 has been scheduled for December 5 at 6:30 p.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 6:30 p.m. on December 12. The date, time and place for the continuation hearing must be announced prior to adjournment of the public hearing on December 5. If additional time is not needed for citizen comments, a motion should be passed to cancel the scheduled continuation hearing. State law requires that cities must adopt their 1997 budget and final property tax levy for taxes payable in 1997 at a subsequent public hearing. Therefore, another public hearing has been scheduled for December 9 at 7:00 p.m. in the Council Chambers. The date, time and place for the December 9 hearing must also be announced prior to adjournment of the public hearing on December 5. If additional time is needed for citizen comments, then the continuation hearing should be held at 6:30 p.m. on December 12. In this case the budget adoption hearing would have to be held at 7:00 p.m. on December 16. P: \FINANCE \WP \AGN \97PR0P.TAX CITY OF MAPLEWOOD 1997 PROPOSED PROPERTY TAXES AND 1997 PROPOSED BUDGET PUBLIC HEARING DECEMBER 5, 1996 HOW YOUR PROPERTY TAXES ARE DETERMINED Box 1 Total Proposed Local Budget -minus Box 2 All Non - Property Tax Revenue, eg: * State Aid * Fees, Etc. = equals Box 3 Property Tax Revenue Needed (Levy) divided by Box 4 Assessor's Market Value x times Box 5 State Mandated Class Rates = equals Box 6 Total "Tax Capacity" (Formerly Assessed Value) Box 7 Property Tax Rate ( "Tax Capacity" Rate) = equals YOUR PROPERTY TAX = Your Property's Market Value X Class Rates) X " Tax Capacity " R= Source: "Understanding Your Property Taxes. 1994 Edition." Minnesota Taxpayers Association, p. 6 FORMULA FOR 1996 PROPERTY TAXES Steer 1 - Calculate Tax Qpac a v MARKET X STATE HOMESTEAD = TAX VALUE FORMULA CAPACITY $100,000 $ 72,000 X .01 = $ 720 $ 720 28 X .02 = $ 560 560 $100,000 $1,280 S te 2 - Calculate Tax Based TAX g on Tax Cam; TAX = PROPERTY CAPACITY RATE TAX $1,280 136.594% $1,747.83 (Note: Tax rate is for home in /SD 622 and Battle Creek portion of the Metro Watershed.) SteD3 - Calculwe Tax. Based MARKET X on Market Value TAX = TAX VALUE RATE. CAPACITY $100,000 0.07379% $73.79 Stgp 4 - Ca /cu /ate Total Tax-- TAXES BASED + TAXES BASED = TOTAL ON TAX CAPACITY ON MARKET VALUE TAX $1,747.83 $73.79 $1,821.62 PARNANCEMMBUDDOCIBDGTHEAR. NOT ESTIMATED 1997 CITY PROPERTY. TAX CHANGES TAX RATE CHANGES Tax rate on tax capacity Tax rate on market value for open space bonds Payable 1996 Local Tax Rate 20.946% 0.027% Estimated Payable 1997 Local Tax Rate 21.035% 0.027% Percent Change +0.4% 0.0% PROPERTY TAX CHANGES ON HOMES Estimated Market Value * Tax Capacity Tax Increase Percent Decrease $70 $ 700 $ 166 $ 8 5.1% 92,300 ** 1,126 262 19 7.8% 100,000 1 296 21 7.6% 120,000 1,680 385 25 6.9% 140,000 2 11 080 476 30 6.7% 160,000 2,480 565 34 6.4% *The values listed for 1997 are 4.6% more than 1996 which was the average change according to the Ramsey County Assessor's Office. **Average value home in Maplewood PARNANCEMPOUDDOMBDGTHEAR. 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, 1997. 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 1997 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 tax levy for 1997. 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 PAR NANCEIW RBUDDOCIBDGTHEAR. NOT ! �i CITY OF, % 1'I. F 0 D MAPLEW 0 1830 E. COUNIY ROAD B MAPLEWOOD, MINNESOTA 55109 FINANCE DEPARTMENT 612 -770 -4510 August 9, 1996 Honorable Mayor and Counc Members: I am pleased to transmit the 1997 Proposed Budget for the City of BUDGET Maplewood for your review and approval. The budget document includes AWARD workload indicators for each department for the first time. The remaining parts of the document are in a format similar to the 1996 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 1997 financial plans and provide an operations guide for all City departments. The Budget is- divided into three main sections: operations, Capital Improvements, and Debt Service. Within the operations section, the basic focus is on 1997 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 1997. The Debt Service section focus is on the scheduled bond issue principal and interest payments due in 1997. The mission statement of the City of Maplewood is "to provide high - quality OBJECTIVES and cost effective public services ". The major objectives of the 1997 Budget are designed to help the City accomplish this mission. These budget objectives include the following: keep . the property tax increase under 5 begin the operation of a municipal fire department, decrease the net loss at the Community Center to $150,000 or less 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. 1 -5 Equal Opportunity Employer The City's tax for 1997 is $ 800 which is 4.8 % more than 1996. TAX LEVY Approximately 79% of the total levy is for operations financed by the INCREASE General Fund. Most of the remaining levy (17%) is for debt service costs FOR 1997 on bond issues. The remaining 4 % of the tax levy is for capital IS 4.8 % improvements. CITY RECEIVES 16.6° OF TAXES In 1996 the City received 16.6 % of the property taxes on property within the City. It is anticipated that this rate will not change significantly in _ 1997. The following indicates the allocation of property tax dollars by government type: X Ps THE tit iVIT �� W n�. ww R+��rtw ,, 1 11115 M OTL If LEGALT[Mp[R �"'�'�" 1 FOR AU 09 VS. /Y011t AND 'NAIL � � 61729445 A. ! 1 wA,4TvvcGTo'..D.G. E 10 7 10 a s* E0 J6172' 9445A � -- 10 t r r 5.3% 16.6% 31.3% Other City County 46.8% Schools It should be noted that the above data is for property in Maplewood that is located within School District 622. 1 -6 1997 EXPENDITURES BUDGET $29.7 MILLION Revenues for the 1997 Budget are higher and expenditures are lower than the 1996 Budget. REVENUES AND EXPENDITURES. BY SECTION Comparison of 1996 and 1997 Budget REVENUES EXPENDITURES Amount Change Amount Change [" Operations $21,1051,070 +3.4% $21,233,140 +2.3% Capital Improvements 3,475,330 +5.4 4 -18.3 Debt Service 2 -10.3 3,864,090 -53.6 Totals $26,702,480 +2.4% $29,653,110 -14.4% 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, g firefi htin street maintenance, recreation programs, park maintenance, firefighting, 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 1997 listed for each department and by the percentage of budgeted expenditures that are spent, Operating budget revenues for 1997 are 3.4% more than 1996. The OPERATING revenue category with the largest increase is property taxes which are up BUDGET $531,020 due to the .increase in the tax levy for the operating budget. REVENUES Licenses and permit revenues for 1997 are projected to increase by UP 3.4% $107,340 and most of this increase is for building permits. Revenues in the charges for service category include a planned increase in ambulance rates effective Janu ary 1, 1997 as indicated in the following table. 1 -7 AMBULANCE RATES UP 5.9% UTILITY RATES UP 3.4% The 1997 ambulance rates are based upon the average 1996 ambulance rates charged b other providers. The increase in rates will produce g Y P additional revenues of approximately $52,500. The large increase in rates will decrease the property tax subsidy for paramedic services to 1 % . Operating bud et revenues for 1997 produced by utility service charges g will total $3, 644 780 which represents 17.3 % of the total revenues. Utility service charges consist of hydrant charges, sewer service charges and recyc ling charges. Current hydrant charges. and recycling charge rates will be sufficient to finance the 1997 Budget. However, sewer rates will need to be increased by per r quarter to finance the 1997 Budget. The last sewer rate increase was January 1, 1996. Most of the revenues from the sewer rates finance the Metropolitan Council sewage treatment charges to Maplewood which will be 74.6% of the operating expenses for the Sanitary Sewer Fund in 1997. 1 -s AMBULANCE RATE INCREASES Increase 1996 1997 Amount Percent Basic life support: Resident $ 255 $ 270 $ 15 5.9% Non - resident 280 295 15 5.4 Advanced life support: Resident: 495 525 30 6.1 Non- resident 545 580 35 6.4 Char a er mile 7.20 7.65 0.45 6.3% The 1997 ambulance rates are based upon the average 1996 ambulance rates charged b other providers. The increase in rates will produce g Y P additional revenues of approximately $52,500. The large increase in rates will decrease the property tax subsidy for paramedic services to 1 % . Operating bud et revenues for 1997 produced by utility service charges g will total $3, 644 780 which represents 17.3 % of the total revenues. Utility service charges consist of hydrant charges, sewer service charges and recyc ling charges. Current hydrant charges. and recycling charge rates will be sufficient to finance the 1997 Budget. However, sewer rates will need to be increased by per r quarter to finance the 1997 Budget. The last sewer rate increase was January 1, 1996. Most of the revenues from the sewer rates finance the Metropolitan Council sewage treatment charges to Maplewood which will be 74.6% of the operating expenses for the Sanitary Sewer Fund in 1997. 1 -s The following table summarizes the proposed utility rate increases for an average home. J Operating budget expenditures for 1997 are $21.2 million and 2.3 OPERATING higher than 1996. The largest increase is for the Fire Department which BUDGET is up 19.4 %. This increase is partly due to one -time costs associated with EXPENDITURES the formation of a municipal department to replace contracts with the three UP independent corporations that previously provided fire suppression and 2.3% emergency medical services, The Parks and Recreation Department budget also has a large increase. It is up 12.7 %primarily due to increased operating expenses of the community center. The Public Works Department budget is down 5.0% due to decreases in the Water Fund expenses. These expenses are lower as Maplewood will not be assuming responsibilities from St. Paul for the operation of the Maplewood water system as anticipated in the 1996 Budget. Instead a new water agreement has been negotiated that will continue the present retail arrangement but under more favorable terms. Our annual population increases in 1993, 1994 and 1995 were 1.5%, 1.6 % , and 1.9 % respectively. The 1996 population estimate which will be released next year will probably be a 1.9 % increase because building permits issued in 1995 for new housing units totaled 279 which was nearly the same as 1994. The City's 1995 population estimate was 33,533 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. 1 -9 PROPOSED UTILITY RATE INCREASES IMPACT ON AN AVERAGE HOME Quarterly Charge Increase 1996 1997 Amount Percent Water (hydrant $3.70 $3.70 $0 0.0% charge) Sewer service 36.60 38.10 1.50 4.1 Recycling charge 3.60 3.60 0 0.0 Total $43.90 $45.40 $1.50 3.4% J Operating budget expenditures for 1997 are $21.2 million and 2.3 OPERATING higher than 1996. The largest increase is for the Fire Department which BUDGET is up 19.4 %. This increase is partly due to one -time costs associated with EXPENDITURES the formation of a municipal department to replace contracts with the three UP independent corporations that previously provided fire suppression and 2.3% emergency medical services, The Parks and Recreation Department budget also has a large increase. It is up 12.7 %primarily due to increased operating expenses of the community center. The Public Works Department budget is down 5.0% due to decreases in the Water Fund expenses. These expenses are lower as Maplewood will not be assuming responsibilities from St. Paul for the operation of the Maplewood water system as anticipated in the 1996 Budget. Instead a new water agreement has been negotiated that will continue the present retail arrangement but under more favorable terms. Our annual population increases in 1993, 1994 and 1995 were 1.5%, 1.6 % , and 1.9 % respectively. The 1996 population estimate which will be released next year will probably be a 1.9 % increase because building permits issued in 1995 for new housing units totaled 279 which was nearly the same as 1994. The City's 1995 population estimate was 33,533 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. 1 -9 The number of full-time employees included in the 1997 Budget is 141. -5 FULL-TIME This is a decrease of 5 po sitions. The breakdown by department is as EMPLOYEES follows: +1.00 Fire. A full -time secretary has been added in conjunction with the creation of a municipal Fire Department. 1.00 General Government -- One full -time building custodian po sition which is shared with Parks and Recreation) has been eliminated. - 2.00 Parks and Recreation — The Community Center . secretary and ro ram coordinator positions have been eliminated. p g Also, a full -time building custodian position shared with General Government has been eliminated. These changes were made to decrease the net operating loss at the Community Center. -3-00 Public Works —Two utility maintenance positions . for the water system have been eliminated. Also, the utility billing clerk position has been eliminated. These changes have been made due to a new water agreement with the City of St. Paul. 56 o o A roxmatel 56 % of the rating Budget is accounted for in the City's � OPERATING General Fund. Revenues projected for 1997 will be 9.5 % higher than the 1996 Budget. Expenditures will be 3.3 % higher BUDGET IN M. 1997 than the 1996 GENERAL FUND Budget. The 1997 Budget for the General Fund is a deficit budget as 1997 expenditures exceed revenues by $108,800. Transfers to other funds will increase this deficit to $551, 260. The deficit will be financed by using part of the surplus fund balance. The 9.5 % increase in General Fund revenues amounts to $791,490. The GENERAL FUND largest increases are in property taxes (up $457,170) and charges for REVENUES service (up $337,220). In 1997 property taxes will be 46% of total UP 9.5% revenues for the General Fund. This is a small decrease from 1996 when property taxes were 47 % of the revenues. 1 -10 Department expenditure requests for the General Fund were 5.7 % higher GENERAL FUND than the original 1996 Budget. The. 1997 Budget includes recommended PER CAPITA expenditures that are 3.3% higher than the 1996 Budget. This 3.3% EXPENDITURES increase in expenditures is reasonable compared to a combined projected UP 1,8% inflation rate of 2.8 % and growth rate of 1.5 %. On a per capita basis, General Fund expenditures will increase b y 1.8% as indicated in the following table: GENERAL FUND EXPENDITURES 1996 1997 Percent Budge change. Expenditures $11,490,230 $11,872,170 3.3% Population 34,170 34,682 1.5% Per capita expenditures for General Fund $336 $342 1.8% An analysis of the feral Fund cash flow for 1994 and 1995 indicated that GENERAL FUND the 12 -31 -97 fund balance should be 27.6% of the expenditures to finance BALANCE cash flow needs. The fund balance also needs to be large enough to finance WILL unexpected expenditures that are in excess of the General Fund contingency .INCREASE account. Therefore, the budgeted 12 -31 -97 fund balance has been set at 34.2 % of -the 1997 pe budgeted expenditures. This should provide a sufficient g balance to cover cash flow needs and unexpected expenditures. Also, it is reasonabl y close to the 36.1 % level that it was at in October, 1989 when the ci ty y 's bond rating b Moody's Investors Services was increased to Aa. The budgeted 12 -31 -96 fund balance was 31.8 % of the 1996 budgeted expenditures. 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 1997 Budget implements the first year of the 1997- 2001 Capital Improvement Plan adopted by the City Council on July 8, 1996. 1 -11 Revenues for 1997 in the Capital Improvements Budget are $177,210 and CAPITAL 5.4 % more than 1996. This increase is caused primarily by an increase in IMPROVEMENTS state street construction aid to finance improvement projects. Major revenue REVENUES sources for the 1997 Capital Improvement Budget are tax increment revenue UP 5.4% ($910,010) and street construction state aid ($1,975,000). Capital Improvement Budget expenditures planned for 1997 include public CAPITAL improvement projects ($2,940,000), park development ($1,160,000), IMPROVEMENTS refurbish two fire trucks ($150,000) and the continuance of the street EXPENDITURES. overlay and sealcoating program ($100,000). The impact of these items on DOWN operating costs will not be significant. Total 1997 expenditures are 14.6% $4,555,880 and 14.6% less than 1996. This portion of the budget covers the payment of principal and interest on DEBT the City's bonded indebtedness. Each bond issue has a separate debt service SERVICE sinking fund. REVENUES DOWN 10.3% Revenues for 1997 are 10.3% less than 1996 primarily due to a decrease in property taxes. Major revenue sources, as in past years, are property taxes ($1,509,660), special assessments ($351,710), and interest on investments ($260,710). Expenditures for 1997 are 53.6 % less than 1996. The large decrease is DEBT caused by $4,335,000 of prepayments in 1996 on bonds being refinanced at SERVICE a lower .interest rate. If these large prepayments were not included in the EXPENDITURES 1996 Budget, debt service expenditures would be 3.3 % less in 1997. The DOWN 53 . 6°�0 ant tied new debt issues for 1997 consists of (a) a $1,300,000 bond issue . for replacement of the Gladstone Fire Station which is being considered for a 1997 referendum and b a $1,185,000 bond issue for public works improvements. At the end of 1997, general long -term net debt payable will be $27,705,000 which is $285,000 more than projected for the end of 1996. 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 %. OPERATING The City's latest population estimate is 33,533 for 1995 according to the BUDGET Metropolitan Council. This represents a 1.9% increase over 1994. It is anticipated that population growth will continue at the same rate for the next several years. In 1995 the City issued building permits with a total valuation of $94.6 million. In 1994 the City issued building permits with a total valuation of $50.6 million. Permit values were significantly higher in 1995 because of large commercial, buildings. Based on projections in the 1997 -2001 Capital Improvement Plan, the CAPITAL Capital Budget will range from $1.6 million to $3.4 million in 1998 -2001. IMPROVEMENT Major factors affecting the capital budgets will be (a) the referendum for EXPENDITURES replacement of the Gladstone Fire Station in 1997, (b). the number of public WILL improvement projects that are approved for construction and (c) the DEPEND ON referendum in 1999 for park improvements. Bond issues to finance the REFERENDUMS 1997 -2001 Capital Improvement Plan total $6,840,000. Conserving the financial resources of the City continues to be important. C Q N C LU S I o N 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 pro viding the services that make it a good place to live. The Council's cooperative effort in the review and adoption of the 1997 Budget will be greatly appreciated. I would also like to express my appreciation to all City personnel who assisted in the preparation of the 1997 Budget. Michael A. McGuire City Manager 1 -13