HomeMy WebLinkAbout2009-07-28_STUDY SESSIONBUDGET WORK SESSION
July 7, 2009
5:00 PM
1. 2008 Results
2. 2009 Year End Forecasts
3. 2010 Levy Limit
4. 2010 Non Tax Revenues
Investment earnings
Licenses and Permits
Fines
Franchise Fee /Street Light Utility
5. 2010 Expenditure Issues
Personnel Costs
Equipment
CIP
6. Budget Calendar
General Fund
Statement of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
For the year ended December 31, 2008
Revenues:
Taxes (1)
Licenses and permits
Intergovernmental
Charges for service
Fines and forfeitures
Other revenues
Total revenues
Expenditures:
General government
Public safety
Public works
Parks
Total expenditures
Revenues over (under)
expenditures
Other financing sources (uses):
Transfers in (out)
Liquor fund
Construction fund
Sale of capital assets
Total other financing sources
Final
Budget
$ 20,241,404
2,715,050
745,000
2,637,388
925,000
598,000
27,861,842
4,254,566
14,097,930
6,400,246
3,851,900
28,604,642
(742,800)
742,800
(450,000)
50,000
342,800
2008
Actual
$ 19,983,295
2,885,781
825,049
3,039,841
968,893
533,419
28,236,278
4,008,170
14,214,025
6,470, 700
3,660,862
28, 353, 757
(117,479)
742,800
(450, 000)
96,825
389,625
Over/
(Under)
$ (258,109)
170,731
80,049
402,453
43,893
(64,581
374,436
(246,396)
116,095
70,454
(191,038)
(250,885)
625,321
46,825
46,825
Net increase (decrease)
in fund balance $ (400,000) $ 272,146 $ 672,146
City of Edina
General Fund
Fund Balance Reserved and Unreserved. Designated
FUND BALANCE RESERVED
3615 . Reserve for Prepaid Insurance
UNRESERVED: DESIGNATED
3851
Dedicated Funds - Parkland
3855
Designated for unrealized inv gains /losses
3856
Designated for Equipment Replacement
3857
Designated for Compensated Absences
3860
Designated for General Fund Cash Flow
3875
Undesignated
TOTAL FUND BALANCE
G:\Audit \Workpapers 2008 \Reserves \RESERVES 2008.xls
12131/2007 ADJUSTMENTS
$ 28,637.00 $ (14,655.50)
28,637.00 (14,655.50)
178,295.00
63, 757.37
2,523,218.71
1, 305, 005.00
9,108,632.00
899, 311.92
14,078,220.00
(52,372.20)
81,091.01
99,479.00
365, 079.00
(206,475.31)
286,801.50
$ 14,106,857.00 $ 272,146.00
�1
12/31/2008
$ 13,981.50
13,981.50
178,295.00
11,385.17
2,604,309.72
1,404,484.00
9,473,711.00
692,836.61
14, 365, 021.50
$ 14,379,003.00
ER 7/7/2009 12:52 PM
General Fund
Statement of Revenue, Expenditures and Changes in Fund Balance - Budget and Estimated
Estimated For the twelve months ended December 31, 2009 (1)
Q� v Revenues:
�1M Taxes (2)
Licenses and permits
�t ,c Intergovernmental
Charges for service
Fines and forfeitures
Other revenues
Total revenues
Expenditures:
General government (3)
Public safety
Public works (4)
Parks
Total expenditures
Revenues over (under)
expenditures
2009
2008
Over/ Increase/
Budget Estimate (Under) Actual (Decrease)
$ 21,052,691 $ 20,341,600 $ (711,091) $ 19,983,295 $ 358,305
2,797,715
2,100,000
(697,715)
2,885,781
(785,781)
757,000
757,000
-
825,049
(68,049)
2,701,480
2,858,000
156,520
3,039,841
(181,841)
900,000
1,146,000
246,000
968,893
177,107
653,972
401,000
(252,972)
533,419
(132,419)
28,862,858
27,603,600
(1,259,258)
28,236,278
(632,678)
4,498,511
4,128,000
(370,511)
4,008,170
119,830
14,648,719
14,561,000
(87,719)
14,214,025
346,975
6,524,694
6,483,000
(41,694)
6,470,700
12,300
3,961,034
3,875,000
(86,034)
3,660,862
214,138
29,632,958
29,047,000
(585,958)
28,353,757
693,243
(770,100)
(1,443,400)
(673,300)
(117,479)
(1,325,921)
Other financing sources (uses):
Transfers in (out)
Liquor fund 765,100 765,100 - 742,800 22,300
Construction fund (50,000) (50,000) - (450,000) 400,000
Sale of capital assets 55,000 55,000 - 96,825 (41,825)
Total other financing sources 770,100 770,100 - 389,625 380,475
Net increase (decrease)
in fund balance $ - $$ (673,300 $$ ( $ 272,146
1 This is a forward- looking statement. Figures represent preliminary estimates and include many assumption-
2 Tax collections assumed to be 97 %.
3 General government expenditures include contingencies and severance expenditures, which are
down through the first six months of 2009.
4 Public works expenditures are lower in 2009 due to equipment that was financed with certificates.
.1,110 w
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-rte
Franchise Fees.and Street Light Utility- -City data.
7/7/2009
Streetlight
Chit (
Franchise Fee
Amount
Utili
Amount
Brooklyn Center
Yes
ROW only
Yes
. Burnsville
No
Yes
Champlin
Yes
$2.50 per month each
Crystal
No
Yes
$4.00 /quarter
Delano
Yes
5% of gross revenues - -gas; $.00317 per kW /H electricity sold
No
Grand Marais
Yes
Electric, $40;000 annually; plus 1 %
No
Lakeville
No
Yes
SF $6.75 /quarter
Lindstrom
Yes
No
Lino Lakes
Yes
Only on one provider.
No
Luverne.
Yes
Yes
$2.00 /month
Mound
Yes
$2.00 per month each
Yes
$2.50 /month
Moundsview
Yes
3.75%
Yes
SF $3:25 /quarter
New Ulm
Yes
5% PILOT (utilities are city- owned)
No _
Oakdale
No
Yes
SF $10.00 1quarter
Plymouth
No
Yes
Only billed to developments With streetlights .
Ramsey
No
Had one, but let it sunset last year
Yes
Richfield
Yes
No
In process of reinstituting it this year
Robbinsdale'
Yes
4% gas /4% electric
No
-
May be considering incorporation of streetlight fees into
Rochester
Yes
PILOT (utility is city- owned)
No
electric rates
Savage
No
Yes
Shoreview
No
Yes
Implemented to make up #orrloss of MVHC in 2003
St. Michael
Yes
$2.50 /month (electric only)
Stillwater.
Yes
Yes
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'LEAG U E oi-
MINNESOTA
CITIES
By:
Tom Grundkoefer
Alternative Revenues — Beyond Bread and Butter
Introduction
With intergovernmental aid flat or declining and levy limits a resurrected blight on the municipal soul,
what's a cash - strapped city to do? While reducing expenses and having efficient city operations are
always important, this memorandum will focus on alternative ways for cities to increase the revenue side
of the budget equation.
City revenues generally fall into one of three main categories:
Taxes
Assessments
Fees and charges
This paper will look at ways that cities can enhance the revenue producing potential in each of these
broad categories.
Taxes
General property tax levies
Political and legal considerations often place limits on the ability of cities to raise revenue through
general property tax levies. Beginning with taxes payable in 2009, cities with populations of over 2500
are subject to three years of imposed levy limits. The levy limit allows for up to a 3.9% increase in local
property tax levy. Each city's previous year levy plus local government aid, form the base for
computing the 3.9% allowable increase. The limit also permits a.5% increase if a city experiences an
increase in households and an additional .5% increase if a city experiences an increase in
commercial /industrial property. A city may also exceed its levy limit by an amount approved by the
majority of those voting on the question at a general or special election.
Special levies
State law allows a variety of special levies to meet specified city needs. Permitted special levies
include:
A levy to cover the costs incurred for securing, maintaining, or demolishing foreclosed or
abandoned residential properties as allowed by the Department of Revenue. A city must
have either a foreclosure rate of at least 1.4% of households in 2007 or a foreclosure rate
in 2007 in the city or in a zip code area of the city that is at least 50% higher than the
average foreclosure rate in the metropolitan area to use this special levy.
A levy to pay costs attributable to wages and benefits for sheriff, police, and fire
personnel. (If a city did not include this special levy in the previous year's levy limit
League of Minnesota Cities, October 2008
base, reduce that base number by the amount equal to the previous year's levy for these
costs, thus allowing a slightly higher levy.) These payments include contributions to
police and fire pensions that are not made through the Public Employees Retirement
Association (PERA).
Other special levies as identified in Minn. Stat. § 275.70.
Other levy authority
Local lodging tax
A city may pass an ordinance to impose up to a 3% tax on the gross receipts of lodging at a hotel, motel,
rooming house, tourist court, resort, or city campground. The law requires that 95% of the gross
proceeds from the tax be used to fund a local convention or tourism bureau for marketing and promoting
the city. (Minn. Stat. § 469.190).
Gambling tax
Cities may impose up to a 3% local gambling tax on licensed gambling organizations in order to cover
the cost of regulating lawful gambling. A city may not use these tax revenues for any other purpose.
This tax may not be imposed if the city charges a local investigation fee.
In addition, a city may require organizations conducting lawful gambling to contribute 10% of their net
profits derived from lawful gambling to a city - administered fund to be disbursed for lawful purposes.
Such funds cannot be used for the benefit of a pension or retirement fund. (Minn. Stat. § 349.213)
Special district taxing authority
The legislature has authorized the establishment of several different special taxing districts, including:
- Storm sewer improvement districts — Minn. Stat. § 444.16
- Sidewalk improvement districts — Minn. Stat. § 435.44
- Urban and rural service districts — Minn. Stat. § 272.67
- Special service districts — Minn. Stat. § 428.02
- Housing improvement districts — Minn. Stat. § 428A.13
- Fire service districts — Minn. Stat. § 368.85 via Minn. Stat. § 415.01
Payments in lieu of taxes
Some of the heaviest users of city services are churches, colleges, Indian casinos and other tax - exempt
entities. These entities will often have a strong interest in seeing that city services, facilities and finances
remain strong and are willing to voluntarily pay something for the services they use. Many cities have
successfully negotiated payments in lieu of taxes from these entities.
League of Minnesota Cities, October 2008
Assessments
In addition to authority to impose property taxes, state statute also permits cities to assess individual
property owners for improvements or services that uniquely benefit them. Most of that authority is
found in Minnesota Statute Chapter 429. The main advantage of using Chapter 429 is that it allows for
the imposition of "tax like" charges only on benefited properties; and allows a charge on properties that
might otherwise be exempt from general property taxes. The most challenging aspect of Chapter 429
charges is that a city will need to be able to show that the value to the property meets or exceeds the
amount of the assessment. Chapter 429 provides two unique tools for cities to recoup the amount of
services or improvement provided to property owners.
Local Improvements
First, Minn. Stat. § 429.021 provides a list of 20 or more "local improvements" for which cities may
assess property. They include costs incurred:
(1) To acquire, open, and widen any street, and to improve the same by constructing,
reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle parking
strips of any material, or by grading, graveling, oiling, or otherwise improving the same,
including the beautification thereof and including storm sewers or other street drainage and
connections from sewer, water, or similar mains to curb lines.
(2) To acquire, develop, construct, reconstruct, extend, and maintain storm and sanitary sewers
and systems, including outlets, holding areas and ponds, treatment plants, pumps, lift
stations, service connections, and other appurtenances of a sewer system, within and without
the corporate limits.
(3) To construct, reconstruct, extend, and maintain steam healing mains.
(4) To install, replace, extend, and maintain street lights and street lighting systems and special
lighting systems.
(5) To acquire, improve, construct, reconstruct, extend, and maintain water works systems,
including mains, valves, hydrants, service connections, wells, pumps, reservoirs, tanks,
treatment plants, and other appurtenances of a water works system, within and without the
corporate limits.
(6) To acquire, improve and equip parks, open space areas, playgrounds, and recreational
facilities within or without the corporate limits.
(7) To plant trees on streets and provide for their trimming, care, and removal.
(8) To abate nuisances and to drain swamps, marshes, and ponds on public or private property
and to fill the same.
(9) To construct, reconstruct, extend, and maintain dikes and other flood control works.
(10) To construct, reconstruct, extend, and maintain retaining walls and area walls.
(I ])To acquire, construct, reconstruct, improve, alter, extend, operate, maintain, and promote a
pedestrian skyway system.
(12) To acquire, construct, reconstruct, extend, operate, maintain, and promote underground
pedestrian concourses.
(13) To acquire, construct, improve, alter, extend, operate, maintain, and promote public malls,
plazas or courtyards.
(14) To construct, reconstruct, extend, and maintain district heating systems.
League of Minnesota Cities, October 2008
(15) To construct, reconstruct, alter, extend, operate, maintain, and promote fire protection
systems in existing buildings.
(16) To acquire, construct, reconstruct, improve, alter, extend, and maintain highway sound
barriers.
(17) To improve, construct, reconstruct, extend, and maintain gas and electric distribution
facilities owned by a municipal gas or electric utility.
(18) To purchase, install, and maintain signs, posts, and other markers for addressing, related to
the operation of enhanced 911 telephone service.
(19) To improve, construct, extend, and maintain facilities for Internet access and other
communications purposes, if the council finds that:
(i) the facilities are necessary to make available Internet access or other communications
services that are not and will not be available through other providers or the private market
in the reasonably foreseeable future; and
(ii) the service to be provided by the facilities will not compete with service provided by
private entities.
(20) To assess affected property owners for all or a portion of the costs agreed to with an
electric utility, telecommunications carrier, or cable system operator to bury or alter a new
or existing distribution system within the public right -of -way that exceeds the utility's
design and construction standards, or those set by law, tariff, or franchise.
The list of permissible improvements for which cities may levy special assessment goes well beyond the
traditional items such as sewer, water, curb, gutter and street repaving. Take a close list and consider
whether your city might be able to levy special assessments for some of these services and
improvements.
Current Services
The second category or services for which cities may levy assessments includes:
(1) Snow, ice, or rubbish removal from sidewalks;
(2) Weed elimination from streets or private property;
(3) Removal or elimination of public health or safety hazards from private property;
(4) Installation or repair of water service lines, street sprinkling or other dust treatment of
streets;
(5) The trimming and care of trees and the removal of unsound trees from any street;
(6) The treatment and removal of insect infested or diseased trees on private property, the
repair of sidewalks and alleys;
(7) The operation of a street lighting system;
(8) The operation and maintenance of a fire protection or a pedestrian skyway system;
(9) Reinspections which find noncompliance after the due date for compliance with an order to
correct a municipal housing maintenance code violation;
(10) The recovery of any disbursements under Minn. Stat. § 50413.445. subd. 4.
If a city incurs expenses with respect to any of the above, it is certainly appropriate for the city to assess
those charges to the property benefited rather than have all tax - payers subsidize the services
League of Minnesota Cities, October 2008
provided to the single property owner. In these times when vacant properties and foreclosures are
prevalent, consider charging and assessing for city costs associated with property inspection and
maintenance.
Charges and fees
Charges
One of the easiest things a city can do to generate new revenue is to take full advantage of its assets and
impose a reasonable charge for their use. Consider the assets that many cities have and think about
whether your city is generating enough revenue from their use.
Asset
Money
Investments
Community room
Water tower
Golf course, swimming pool, etc.
Sewer and water
Park shelters
Streets
City signs and scoreboards
Fees
Charge
Interest on checking account/maximizing return
Policy that responsibly balances returns and risk
Appropriate rental charges
Renting to cellular operations
Is charge sufficient to cover all operational costs?
Do rates cover all costs?
Charging for use
Utility franchise.fees
Selling advertising
Another underutilized opportunity to generate revenue requires a city to evaluate and study the true cost
of city services and charge a fee that covers those costs. Often cities don't include all of their costs in
arriving at fees. For example, many cities do not adequately calculate overhead charges in arriving at
fees. For instance, are costs such as insurance, utility, the fair value of space, technology, employee
benefits, supplies, fuel and other costs adequately captured when deciding how much to charge for city
services? Similarly, often cities don't calculate police costs in calculating fees. In short, don't
undervalue the true costs of city services when deciding how much direct users of those services should
pay.
League of Minnesota Cities, October 2008
Some examples:
Service
Building inspections
Liquor licenses
Gambling licenses
Zoning fees
Fee
Should cover all overhead costs
Include police oversight
Include costs to process
Include city council costs
Business licenses Inspection costs
A word about the expense side of the equation
Obviously tight budget times call for a close evaluation of both the revenue and expense side of the
budget equation. This document focuses mostly on the revenue side, but it is absolutely true that
governmental units everywhere need to study ways of reducing cost and improving efficiency.
Examples of city efforts aimed at reducing expenses include:
- More shared services and facilities with other governmental units
- Reduced hours or days of operation — city hall hours, library hours, etc.
- Reduced energy consumption
- Car pooling
- Refinancing bonds
- Adopt a park or street programs
- Other ideas
Conclusion
Tough budget times call for strong, courageous and creative leadership.
League of Minnesota Cities, October 2008
REVENUE
EXPENDITURES
REVENUES OVER EXPENDITURES
TRANSFERS /SALE OF ASSETS
TOTAL REVENUES OF EXPENDITURES
ANNUAL SURPLUS BEFORE CIP TRANSFER
TRANSFERRED TO CIP
CITY OF EDINA
OPERATING RESULTS
LAST 6 YEARS
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
BUDGET
ACTUAL
BUDGET
ACTUAL
BUDGET
ACTUAL
BUDGET
ACTUAL
BUDGET
ACTUAL
BUDGET
ACTUAL
21,695,119
21,725,948
21,942,655
22,524,128
23,279,756
25,352,635
24,635,018
27,058,590
26,169,866
27,717,088
27,861,842
28,236,278
22,245,119
21,353,730
22,609,155
22,281,367
23,961,256
24,235,722
25,330,248
25,748,023
27,191,066
27,380,639
28,604,642
28,353,757
- 550,000
372,218
- 666,500
242,761
- 681,500
1,116,913
- 695,230
1,310,567
- 1,021,200
336,449
- 742,800
- 117,479
550,000
- 95,350
666,500
0
681,500
85,045
695,230
704,687
571,100
- 63,630
742,800
389,625
0
276,868
0
242,761
0
1,201,958
0
2,015,254
- 450,100
272,819
0
272,146
826,868
909,261
1,883,458
2,065,254
922,819
722,146
645,350
666,500
•
686,500
. .
50,000
650,000
450,000
• TRANSFERRED LIQUOR TRANSFER DIRECTLY TO CIP
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