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AGENDA
CITY COUNCIL WORKSHOP
June 24, 2013
5:30 p.m.
Conference Room 170
1. CALL TO ORDER
2. APPROVE AGENDA
3. 2014 BUDGET DISCUSSION
4. CITY ADMINISTRATOR UPDATE
5. ADJOURN
PUBLIC INFORMATION STATEMENT
Council workshops are conducted as an informal work session.All discussions shall be considered fact-finding,hypothetical and unofficial
critical thinking exercises,which do not reflect an official public position.
Council work session outcomes should not be construed by the attending public and/or reporting media as the articulation of a formal City policy
position. Only official Council action normally taken at a regularly scheduled Council meeting should be considered as a formal expression of
the City's position on any given matter.
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TO: Mayor and City Council
FROM: David J. McKnight, City Administrator
SUBJECT: Draft 2014 Budget/Levy Limits
DATE: June 24, 2013
INTRODUCTION
As you are all aware city staff has been working on the draft 2014/2015 budget over the past few
months. The end of the 2013 legislative session brought levy limits back into place for local
governments at the last minute of the session. We have received some rough estimates from the
League of Minnesota Cities that have caused some issues that you need to review and provide
some guidance.
DISCUSSION
The determination of what our 2014 levy limit will be has been a frustrating project over the past
few weeks. The League of Minnesota Cities has provided a formula to give us an idea of what
the number will be prior to the Minnesota Department of Revenue providing us the actual
number no later than September 1, 2013. The issue that is complicating things for Farmington is
that we are also scheduled to start receiving local government aid again in 2014. This will be the
first year we have received local government aid since 2004.
I will review how the levy limit number is determined at your work session on Monday,June 24,
2013. I have not included the presentation that I will do at that meeting because it has the
potential to confuse you if it is not explained properly.
To summarize this issue as simply as I can,the fact that we are receiving local government aid in
2014 without receiving any in 2013 means we will not be able to increase our operating tax levy
for next year. Any levy associated with debt repayment is outside of levy limits and therefore
can increase.
The amount of local government aid we are scheduled to receive is almost exactly 3%of our
2013 property tax levy. The issue we encounter is that our conservative approach to local
government aid for next year was to spend that money on one-time like purchases so as to not
become reliant on this funding in the future.
That approach, along with our inability to raise our operating levy,restricts our ability to fund
items that were not included in the 2013 operating tax levy including:
1. CIP
2. Ice Arena Levy
3. Operational Increases
Without getting into the details, if you apply the current draft of the 2014 budget/tax levy to the
information we have on levy limits for 2014, we need to reduce our tax levy by just over
$300,000. This is in addition to the reductions of$117,354 that I reduced the tax levy since your
June 10, 2013 work session.
I will go over the levy limit determination and ask you to provide direction on three areas issues
at the work session:
1. How do you want to spend the local government aid we receive?
2. How do we achieve the reductions of just over$300,000
3. Are you willing to consider funding the CIP through a five year bond?
More information on these issues will be shared and discussed at the work session on Monday
night.
BUDGET IMPACT
All of the information contained in this memo has significant budget implications for 2014 and
beyond.
ACTION REQUESTED
At this point I am looking for direction on the three issues listed above. Any and all direction on
these issues will help staff update the draft 2014 budget and reach the levy limit targets put in
place by the legislature. If you have any questions please let me know. Thank you for your time
on this important matter.
Respectfully submitted,
David J. McKnight
City Administrator