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HomeMy WebLinkAbout06.09.14 Work Session Packet City of Farmington Mission Statement 430 Third Street Through teamwork and cooperation, Farmington,MN 55024 the City of Farmington provides quality services that preserve our proud past and foster a promising future. AGENDA CITY COUNCIL WORKSHOP June 9, 2014 6:30 p•m• Conference Room 170 1. CALL TO ORDER 2. APPROVE AGENDA 3. 2015 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. 4oRkpc City of Farmington z 430 Third Street Farmington,Minnesota 1 651.280.6800•Fax 651.280.6899 q+.+'."moo* wwwci.farmington.mn.us TO: Mayor, Council and City Administrator FROM: Robin Hanson, Finance Director SUBJECT: Draft 2014/2015 Budget DATE: June 9, 2014 INTRODUCTION: Attached for your review are the summary pages for the 2015-2016 General Fund and Debt Service Funds budget and tax levy. The proposed budgets for the remainder of the funds will be reviewed during your July workshop. The budget was developed with the intent of continuing to provide the core General Fund services, continuing to fund the long-term financial planning pieces you have previously put in place and to support your 2014 Strategic Plan. DISCUSSION: The current version of the 2015-2016 General Fund and Debt Service Fund budgets and tax levies are attached for your review. The 2015 draft General Fund budget summary is as follows: 2015 2014 Proposed Budget Budget Revenues $2,931,776 $3,043,207 Expenditures $10,969,831 $11,544,695 Fiscal Disparities (assumed the same as 2014) $2,253,199 $2,253,199 General Fund Levy $5,784,856 $6,248,289 Debt Levy - $2,943,000 $3,059,728 Farmington Net Tax Levy $8,730,856 $9,308,017 6.6% A brief history of tax levy changes is listed below: 2010 2.39% 2012 0.00% 2014 1.92% 2011 3.42% 2013 0.00% There are a number,of reasons for the increased budget and tax levy which are detailed below. Revenues Licenses and Permits Animal licenses have historically been renewable every two years. In 2014 the City also offered the option for owners to purchase a life-time license for their pet. The 2015 animal license budget has been reduced to reflect the option to renew your animal license every other year or the option to purchase a life-time license. After weighing the increased building activity the City experienced in 2013 and is continuing to experience in 2014 with the knowledge that the City has limited lots available, staff is recommending the building permit budget be increased from$315,000 in 2014 to $380,000 for 2015,but less than 2013 actual building permit revenue. Intergovernmental Local Government Aid (LGA) has been updated to reflect the amount approved this past legislative session. The City's share is $276,607, an increase of$31,278. A detailed proposal regarding staff's recommendation for the expenditure of these funds is included later in this memo. The MSA Maintenance amount has been updated based on actual monies received to-date in 2014. Charges for Service The Fire Charges revenue has been increased based on recent experience. Police Service Charges have been reduced to reflect the current reimbursement arrangement with the school district for one school resource officer(SRO). Investment Income In our continued effort to reduce the General Fund's reliance on investment income attributable to other funds,this budget has been further reduced for 2015. Transfers In The Transfers In from the Enterprise Funds to cover personnel related costs and administrative services have been increased by 3%to reflect the City's increased costs for personnel and administrative support,this includes the two liquor stores. Expenditures All of the budgets include anticipated human resources costs based on approved union contracts, the recently approved wage study implementation plan, increased retirement plan contributions recently approved by the legislature,health insurance benefits arrangements estimates, and worker's compensation premium increases. The majority of budgets have also seen an increase in their technology related costs as the City continues to expand the use of technology,provide ongoing technology support and upgrade hardware and software, as needed. Administration The Legislative budget includes $25,000 for continued strategic planning, a customer survey, and increased technology costs for the purchase of Novus Agenda and iPad support. The remainder of the budgets reflect personnel and technology increases previously discussed. Finance and Risk Management The 2015 Finance budget anticipates increased costs associated with a new audit contract which we expect will be bid later this year. The Risk Management budget reflects the increased premium costs for property and casualty insurance and$10,000 to begin to fund the City's actual insurance deductible experience. Police The Police Administration budget includes money to purchase Axon Flex body cameras,the related software and upgrading of all phones to smart phones to improve the department's evidence collection and storage of this same information. Note: the budget for three replacement vehicles has been included in the Transfers Out line item described later in this memo. Fire The Fire budget includes $15K for pump testing, $12K for continued hose replacement, $14K for painting/sealing of Station 1 (remaining$14K to be budgeted in 2016),and$25K for positive pressure ventilators and extraction pumps. Note: the amounts for the Fire CIP are included in the Transfers Out line item described later in this memo. Engineering In addition to the personnel and technology related items mentioned above,these budgets include $10,000 to support efforts the new Community Development Director may identify, and$10,000 for professional services in the building inspections department if the City needs to contract out work due to increased building levels or code enforcement activities. Municipal Services The area includes an increase of$11,000 to the Snow Removal Services budget. The increase was allocated between street materials and fuel. This budget now approximates $205,000 which is the average expenditure for this department for the past six years, encompassing both good and bad winters. Permanent Levy Adjustment and Delinquency Experience In 2013 the City saw a permanent reduction in its levy of$30,000 due to adjustments made to taxpayers property tax amounts through county valuation appeals,the effect of the Ag Preservation Credit and other miscellaneous adjustments for Dakota County. For 2015 and 2016 an expenditure was budgeted to account for these expected future reductions. In 2016 this amount has been increased by$43K to a total of$73K to take into consideration uncollected tax revenue. In 2013 the City experienced a 1.5%delinquency rate in tax collections ($130K of the current year's taxes were not collected). During the most recent recession the City's delinquency experience was significantly higher than 1.5%. Staff did not feel the City could absorb the full impact of this in one year. So, starting in 2016 the budget includes one- third of this amount. Staff would propose a similar amount be included in the 2017 and 2018 budgets so that eventually the General Fund has this amount built-in and can better withstand these timing differences. Transfers Out The Transfers Out line item is comprised of two parts: General Fund (non-LGA items) and LGA items. The General Fund (non-LGA items) are listed in the first table,while the proposed LGA funded items are listed in the second table. Summary of General Fund(non-LGA) Uses Description Amount Strategic Plan Alignment EDA $40,000 Economic Development and Operations and Finance Arena $20,000 Operations and Finance—Long-term Financial Plan Fire CIP—1 Brush Truck&a Chief's $70,000 Operations and Finance—Long-term Financial Plan Vehicle Capital Equipment Fund—3 Squads $125,000 Operations and Finance—Long-term Financial Plan Sealcoating $350,000 Operations and Finance—Long-term Financial Plan Trail Maintenance $30,000 Operations and Finance—Long-term Financial Plan Building Maintenance $15,000 Operations and Finance—Long-term Financial Plan Total $650,000 Summary of Proposed LGA Uses Description Amount Strategic Plan Alignment Customer Survey&Strategic Planning $25,000 Communication and Engagement Assessments Related to Hotel Parcel $50,000 Economic Development Fire CIP* $30,000 Operations and Finance—Long Term Financial Plan Streets&Equipment CIP** $80,000 Operations and Finance—Long Term Financial Plan Building Maintenance $2,707 Operations and Finance—Long Term Financial Plan These funds would be used to pay for: $82,300 Application of Technology • A new software tool and redesign of the City's website, • the costs associated with updating the City's remaining computers to the same operating system and Office suite software, • Point of Sale software for the pool, • the purchase of Accounts Payable automation software,and • online employment application software. New lights at the Rambling River Center $6,600 Operations and Finance-RETAP recommendation Total $276,607 *This amount was originally$75,000. The budget envisions the transfer of the existing Commercial Enforcement vehicle from the Police department to the Fire department to replace one of its existing Chiefs vehicles. This amount is fully depreciated, so there would be no cost to the Fire department. The Police department would then use the monies previously allocated to the Fire CIP to replace the Commercial Inspector's vehicle. ** The current Streets&Equipment CIP plan does not provide for any replacement vehicles until 2020. This allocation envisions the transfer of$80,000 of 2015 LGA funds to the Capital Equipment Fund(new)to begin to address replacement vehicle needs in this area. Specifically, Todd Reiten would assess the City's vehicles and determine if there are vehicles for which it no longer makes sense to repair. A recommendation would then be made to Council before this money was spent. Remaining monies, if any,would be captured in this fund to address the next vehicle replacement(s)when it is needed. The budget envisions that if LGA continues in 2016 and beyond a similar funding mechanism would be used to bridge the time from now until in 2020 when capital equipment funding began in the CIP. Fiscal Disparities—This amount will not be known until late August. For now,the amount included in the 2015 and 2016 budgets is the same as the 2014 budget. Debt Service Funds Levy The attached Debt Service Funds budget provides funding for scheduled debt principal and interest repayment obligations, as well as ongoing trustee, assessments, arbitrage and post- issuance compliance fees related to the City's debt; it continues to strengthen the cash flow for several of these debt issue as the City continues to work toward full compliance with the 105% funding requirement; and begins to provide funding for the 195th Street Reconstruction project. Additional Notes Assuming the 2015 fiscal disparities monies are the same as the amount to be received in 2014, the City's levy would need to increase 4.02%to fund increased human resource costs and budgeted debt service needs. These are items that you have already approved in 2013 and 2014. The estimated increase to the average residential homeowner's property taxes (assumes an estimated market value of$197,416)would be $35.69. The estimated market value(EMV) for next year increased from $179,338 to $197,416, an increase of 10.08%. The additional 2.58% included in the City's draft budget,totaling a 6.6% increase, is estimated to cost the average homeowner an additional $26.86, for a total projected increase of$62.55 on the average residential home. The attached budget does not provide any funding for a new ladder truck, any recommendations that may come from the Aquatics Feasibility Study or any Ice for Tigers funding requests. BUDGET IMPACT: All information is related to the development of the 2015 city budget and tax levy. The 2016 projected budget numbers have had minimal review;they are a work in progress. Updated amounts will be included in the next version of the General Fund budget for your review. ACTION REQUESTED: At this point staff is looking for specific direction on whether we are headed in the right direction with the budget approach and the amount, if any, of levy increase you would be willing to support to assist in achieving your strategic goals, continuing to provide core services to our residents and businesses and continuing the long-term financial planning steps that you have implemented. Department heads will be in attendance at the work session to answer any questions you may have or provide additional insight into their proposed budgets. Respectfully submitted, Robin Hanson, Finance Director City of Farmington Budget and Tax Levy 2014 Final,2015 Proposed and 2016 Proposed 2015 Budget% 2016 Budget Company 2014 Budget Proposed Proposed Budget Change Budget Change /o Revenues Licenses and Permits 417,873 483,220 15.64% 483,220 0.00% Intergovernmental Revenue 680,891 755,8571 11.01% 755,857 0.00% Charge for Service 585,100 554,950 (5.15)% 557,350 0.43% Fines and Forfeitures 70,800 72,000 _ 1.69% 7.2,000 0.00% Investment Interest 55,000 20,000 (63.64)%a 9,440 (52.80)% Miscellaneous 35,500 38,000 7.04% 39,500 3.95% Transfers In 1,086,612 1,119,180 3.00% 1,152,840 3.01% Total Revenues 2,931,776 3,043,2071 3.80% 3,070,207 0.89% Expenditures Administration _ 858,572 875,877 2.02% 957,514 9.32% Human Resource 251,726 264,168 4.94% 277,451 5.03% Finance and Risk Mgmt 562,154 617,754 9.89% 649,612 5.16% Police 4,072,639 4,120,035 1.16% 4,202,544 2.00% F 1,121,266 F6 961,684 (14.23)% 1,398,038 45.37% Engineering 1,155,773 1,223,672; 5.87% 1,263,143 3.23% Municipal Services 1,234,907 1,290,224 4.48% 1,348,791 4.54% Parks and Recreation 1,222,215 1,278,274 4.59% 1,321,565 3.39% Perm Levy Adj(2015&2016)and 1/3 Delq Exp(2016) 30,0001 73,000 143.33% Transfers Out 490,579 883,007 79.99% 910,000 3.06% Total Expenditures 10,969,831 11,544,695! 5.24% 12,401,658 7.42% Revenues Over(Under)Expenditures (8,038,055) (8,501,488), 5.77% (9,331,451) 9.76% Fiscal Disparities 2,253,199 2,253,1991 0.00% 2,253,199 0.00% General Fund Levy 5,784,856 6,248,289 8.01% 7,078,252 13.28% Debt Levy Debt Levy-Bonds 2,823,000 2,939,728; 4.13% 3,071,848 4.49% Debt Levy-Fire Truck 120,000 120,000 0.00% 120,000 0.00% Total Debt Levy 2,943,000 3,059,7281 3.97% 3,191,848 4.32% Ag Credit 3,000; (100.00)% Farmington Net Tax Levy 8,730,856 9,308,017 6.61% 10,270,100 10.34% Location: Documents\FARMINGTON\Budget 2015-2016\1 General Fund Budget Summary Page 6/5/2014 1:49:32 PM General Fund Detailed Revenue Summary 2013 Actual,2014 Final,2015 Proposed,2016 Proposed General Fund General General General Object Dec YTD Fund Dec Fund Dec Fund Dec Account Actual YTD Budget YTD YTD 2013 2014 Proposed Proposed 2015 2016 LIQUOR LICENSES 31,590 26,000 29,600 29,600 BEER&WINE LICENSES 2,050 2,800 2,200 2,200 CLUB LICENSES 300' 300 500 500 ARCADE LICENSE 655 655 520 520 MASSAGE LICENSE 250 850 100 1001 GAMBLING LICENSE/PERMIT 250 300 150 150' OTHER LICENSE&PERMIT 2,605 2,500 1,400 1,400 ANIMAL LICENSES 1,5691 8,600 1,200 1,200 Licenses 39,2691 42,005 35,670 35,670 BUILDING PERMITS 513,618' 315,000 380,000 380,000 REINSPECTION FEES 1,898' 400 800 800 PLUMBING&HEATING PERMITS 64,224, 32,568 35,000 35,000 SEWER PERMITS 9,675, 5,000 5,000 5,000. ELECTRIC PERMITS 14,3441 7,100 12,000 12,0001 ISTS PERMITS 370 500 350 350 COUNTY SEPTIC FEE (80) UTILITY PERMITS 10,640, 5,500 5,500 5,500 STREETBREAKING PERMITS 0 0 SIGN PERMITS 720 500 500 500 BURNING PERMITS 4,4301 4,300 4,300 4,300 OTHER PERMITS 5,565, 5,000 4,100 4,100 Permits 625,4041 375,868 447,550 447,550; 1 ,I t laenses and Permlts 664,673 417,873 483,220 483,220 FEDERAL GRANT 544 0 LOCAL GOVERNMENT AID 1 245,329 276,607 276,607 MSA MAINTENANCE 197,0581 163,150 190,000 190,000 POLICE AID 180,961 160,362 165,000 165,000 POST TRAINING 40,2721 14,000 25,000 25,000' FIRE AID 127,359, 92,000 92,000 92,000 STATE GRANT 5,960' 2,000 2,000 MARKET VALUE CREDIT 1,517 3,000 COUNTY MISCELLANEOUS 16,772 5,250 5,250 5,250 OTHER MISCELLANEOUS 160 800 Intergovernmental 570,603 683,891 755,857 755,857 CUSTOMER SERVICES NONTAXABLE 788 600 600 0 ZONING&SUBDIVISION FEES 1,605 3,000 1,600 1,600 ADMINISTRATION FEES-PROJECTS 250 500 250 250 FIRE CHARGES 221,303 164,000 175,000 175,000 POLICE SERVICE CHARGES 121,278; 112,500 75,000 75,000 EROSION&SEDIMENT CONTROL 27,900 1 10,500 10,500 10,500 G.I.S.FEES 0 0 PUBLIC WORKS MISC CHARGES 333 200 300 3001 RECREATION FEES-GENERAL 101,0561 100,000 95,000 96,000 POOL ADMISSIONS 40,225 38,000 40,000 40,000 SWIM LESSON FEES 13,3421 17,000 14,000 14,500 i- CONCESSIONS 12,264 10,000 13,000 13,500 RECREATION FEES-SENIOR CTR 20,844 11,000 15,000 16,000 Location: Documents\FARMINGTON\Budget 2015-2016\1.1 Gen'I Fund Revenue Summary Page 1 of 2 General Fund Detailed Revenue Summary 2013 Actual,2014 Final,2015 Proposed,2016 Proposed General Fund General General General Object Dec YTD Fund Dec Fund Dec Fund Dec Account Actual YTD Budget YTD YTD 2013 2014 Proposed Proposed 2015 2016 MEMBERSHIP FEES-SENIOR CTR 11,399 14,000 12,000 12,000; MOBILE MEALS-SENIOR CTR 510 ADVERTISING 655 0 500 5001 ADVERTISING 2,240 1,800 2,200 2,2001 SALES OF ASSETS 17,625 2,000 FRANCHISE FEE 75,000 100,000 100,000 100,000; Charges For Services - - 668,617 ,585,100 554,950 a 557,350 COURT FINES 81,919 70,000 72,000 72,000' CODE VIOLATIONS&ADMIN FINES 0 800 -- -_Flnee,&Forfeitures I '' ' 81,919 '40,800 72,000 72,0001 INTEREST ON INVESTMENTS 72,552 55,000 20,000 9,440 GAIN/LOSS INVEST MKT VALUE (104,425) investm'ent'Income (31,874) 55,000 20,000 9,440 MISCELLANEOUS REVENUE 16,451 5,500 5,000 5,000; CASH OVER&SHORT 1061 RENTAL INCOME-RRC 19,114 13,000 16,000 16,000'; RENTAL INCOME-POOL 2,1991 3,000 3,000 3,5001 RENTAL INCOME 19,427 14,000 14,000 15,000; DONATIONS 2,373 0 Misc Revenue - 59,670 35,500 38,000 39,500 OPERATING TRANSFERS 1,107,4981 1,086,612 1,119,180 1,152,840; .-Transfers in_. . 1,107,498 1,086,612 1,119,180 1,152840 Total-_Revenues - $3,121,106 $2,934,776 $3,043,207 - $3,070,2071 Location: Documents\FARMINGTON\Budget 2015-2016\1.1 Gen'l Fund Revenue Summary Page 2 of 2 General Fund Expense Detail Summary 2013 Actual,2014 Final,2015 Proposed,2016 Proposed Dec YTD Dec YTD Dec YTD Dec YTD Company Actual Budget Budget Entry Budget Entry 2013 2014 2015 2016 Expenditures Administration Legislative(1005) 66,168 73,574 109,514 112,673 Historical Preservation(1006) 7289 7500 75001 7500 Administration(1010) 400 266 457 204 465,713 498 3821 , _ Elections(1013) 2,073 32,837 21,839 27,834 Communications(1014) 79,828 85,923, 100,641 103,3591 City Hall(1015) 172,326 201,534 170,6701 207,766 Community Development(1035) 9,271 0 Administration ' 737,221 858,572 875,877 957,514 Human Resources 176,399 251,726 264,168 277,451 1 Human Resource(1011) 176,399 251,7261 264,1681 277,451 Human Resources 176,399 251,726 264,168 277,451 1 . Finance and Risk Management . 1 Finance(1021) 361,165 406,6541 437,754 454,612! Risk Management(1022) 152,953 155,500 180,0001 195,000 Finance end Risk Management 514,117 562,154 .., 617,754 649,612 , Police 1 Police Administration(1050) 717,835 779,548 817,090 814,263 Patrol Services(1051) 2,578,598 2,520,076 2,521,384 2,594,062, 1 Investigations(1052) 694,280 766,865 775,411 789,319 Emergency Management(1054) 1,665 6,150 6,150 4,900; E----Police ' ' . .:! _ ---- . - 3,992,379 4,072,639 4,120,035 4,202,544 Fire 1 , . I Fire(1060) 851,950! 1,066,542 903,619 1 326 763 , , , Rescue(1061) 46,745 54,724 58,065 71,275 Fire Truck(1062) , 576,870 0 Fire ' 1,475,566 1,121,266 961,684 1,398,038 Engineering r -I Engineering(1070) 516,650 539,884 576,252 597,256! Planning(1030) 244,902 252,209 266,756 273,124' Building Inspection(1031) 236,314 258,320 262,081 271,000 Natural Resources(1076) 105,232 105,360 118,583, 121,763 Engineering ,- ' _ 1,103,099 1,155,773 1,223,672 1,263,143 Municipal Services Streets(1072) 996,7471 1,042,795 1,084,277 1,123,401 Snow Removal(1073) 225,050 192,112 205,407 225,390: Municipal Services - - . - 1,221,796 1,234,907 1,289,684 1,348,791 Parks and Recreation . Park Maintenance(1090) 565,834 559,036 595,742 628,867 Rambling River Center(1093) 148,3401 153,287 169,751 175,859 Park&Rec Admin(1094) 268,924 257,873' 248,062 255,889 Recreation Programs(1095) 88,657 112,851 113,259 120,664 Swimming Pool(1097) 132,563 139,168 151,360 140,286 Parks and Recreation -' 1,204,318 1,222,215 1,278,174 1,321,565 Perm Levy Adj(2015&2016)and 1/3 Deiq Exp(2016) 0 30,000 73,000 1 Transfers Out 442,712.30 490,579.00 883,007.00 910,000.00 Transfers Out . 442,712.30 490,579.00 883,007.00 910,000.00 Total Expenditures LL - 10867,607 10,969,831 11,544,055 12,401,658 6/5/2014 1:51:50 PM Page 1 of 1 Debt Service Funds Summary *Includes Fund 3005 (formerly 86A) as placeholder for Fire Truck loan and Fund 3093 as Placeholder for 2O15A 195th St Bond Issue 2013 Actual, 2014 Final, 2015 Proposed, 2016 Proposed December YTD December December December Company Actual YTD Budget YTD Budget YTD Budget 2013 2014 Entry 2015 Entry 2016 Revenues 1[ Pro p rty Taxes(i.e.Debt Le vy) 2,600,8011 2,943,0001 3,059,728' 3,191,848 Special Assessments 543,122 I 239,041 489,607 466,818 Deferred Assessments(VRC) 23,5391 331,5981 Total Revenues 3,167,463 3,513,639 3,549,3351 3,658,666 Expenditures Principal Repayment 7,444,424 2,473,156 3,082,8191 4,527,474 Interest on Debt 1,218,973 1,078,212 973,822; 990,716 Debt-Fiscal Charges 33,853; 60,608 28,1621 28,593 Total Expenditures 8,697,251 3,611,976 4,084,8031 5,546,783 Transfers Transfers In 4,242,466 639,860 826,140 1,626,552 Transfers Out (1,618,800) (202,000); (4,377,000); (102,000) Total Transfers 2,623,6661 437,860; (3,550,860); 1,524,552 Change In Fund Balance (2,906,122) 339,523 (4,086,328) (363,565) 6/5/2014 1:52:17 PM Page 1 of 1