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HomeMy WebLinkAbout2011 08-29 CCP Joint Work Session with Financial Commission AGENDA CITY COUNCIL /FINANCIAL COMMISSION JOINT WORK SESSION August 29, 2011 6:30 P.M. Council Chambers City Hall 1. Call to Order 2. Governmental Funds and Tax Levy a. Tax Base overview and changes due to legislation b. General Fund estimated expenditures i. Service Levels ii. Staffing Levels c. Revenues to Expenditure Gap 3. Next Steps a. September 6, 2011- Governmental Funds and Tax Levy b. September 12, 2011- Adopt Preliminary Levy c. October 17, 2011- Utility Funds and Rates d. November 7, 2011- Enterprise and Internal Service Funds e. November 28, 2011- Adopt Utility Rates, Pay Plan/Cafeteria Plan f. December 5, 2011- Budget and Taxation Hearing g. December 12, 2011- Adopt Final Tax Levy and Adopt Final Budget 4. Ad j ournment MEMORANDUM - COUNCIL WORK SESSION DATE: 26 August 2011 TO: Curt Boganey, City Manager FROM: Daniel Jordet, Director of Fiscal & Support Services SUBJECT: 2012 Budget — Property Tax Levy Payable in 2012 Recommendation: It is recommended that the City Council consider providing direction to staff regarding the next steps in developing the 2012 preliminary property tax levy to be adopted on Monday, 12 September 2011. Background: A number of issues have come into existence during 2011 that will have an impact on the property taxes levied this fall and paid in 2012. • The first issue is the elimination of the Market Value Homestead Credit (MVHC) which will effectively shift more than $ 650,000 of property tax credits from the State of Minnesota to the non - homestead property tax payers of Brooklyn Center. • Another issue is the Tax Increment District # 2 increment values being moved into the general property tax base. • A third issue is the removal of the Brookdale properties from Tax Increment District # 3 and subsequent formation of Tax Increment District # 5. • Another issue is the ongoing loss of estimated market value in residential and commercial /industrial properties. • A fifth issue is the expiration of levy limits for cities and the implication of that expiration on special property tax levies. Each of these issues will have a different impact on the levy. The first issue deals with a redistribution or shift of tax burden and will have a mixed impact on taxpayers. Homestead residential properties will receive favorable treatments compared with non - homestead and commercial /industrial properties. The other issues deal with overall taxation and will have an impact on the final rate for all taxpayers in a similar manner. Revenues and expenditures for the General Fund will be greatly affected by property tax decisions. In 2007 property taxes accounted for 72% of General Fund revenues. After reductions for LGA, MVHC and other State aid to cities, the 2012 budget currently projects 81% of General Fund revenues coming from property taxes. The present draft of the General Fund budget shows a gap of $ 690,161 between revenues of $ 16,539,554 and expenditures of $ 17,229,715. A summary of the General Fund is being prepared for distribution. Preparation of the present draft General Fund budget has focused on the continuing achievement of the Council's adopted strategic goals. In addition, staff wages have been projected at a 2% increase for the base wage calculation. ?Mission: Ensuring an attractive, clean, safe community that enhances the quality of life andpre.scrves the public trust MEMORANDUM - COUNCIL WORK SESSION Our first draft of the operating budget does not include any use of the $ 411,378 in LGA allotted for 2012. Even if some or all of the LGA is used a funding gap will remain which would require further expenditure reductions or increased revenues. Following Council direction on Monday, 29 August 2011, staff will provide a recommended balanced budget at the joint work session scheduled for Tuesday, 6 September 2011. Council Goals: Ongoing: 2. We will ensure the financial stability of the City 3. We will move toward maintaining or lowering the level of City property taxes NOTE: Staff will deliver a supplemental packet of information on Saturday, 27 August 2011. >Slission: Ensuring an attractive, clean, safe community that enhances the quality' of life and preserves the public trust