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CC 2007 12 03 CHANHASSEN CITY COUNCIL TRUTH IN TAXATION HEARING DECEMBER 3, 2007 Mayor Furlong called the meeting to order at 7:05 p.m.. The meeting was opened with the Pledge to the Flag. COUNCIL MEMBERS PRESENT: Mayor Furlong, Councilman Litsey, Councilwoman Ernst, Councilwoman Tjornhom, and Councilman Peterson STAFF PRESENT: Todd Gerhardt, Roger Knutson, Laurie Hokkanen, and Greg Sticha PUBLIC PRESENT: th Curt Robinson 202 West 77 Street Sarah Wierzbinski 7511 Canyon Curve PUBLIC HEARING ON THE 2008 BUDGET AND LEVY. Mayor Furlong: Thank you everybody and welcome to those here in the council chambers as well as those watching at home. Tonight is the Chanhassen City Council's Truth in Taxation hearing. We will start with a presentation by staff for the preliminary budget and levy that was approved back in September, and then provide opportunity for interested parties to come up and make comment to the City Council. We will not be deciding on any budget or levy items this evening. We're continuing to discuss those in our work sessions and will be continuing after we receive public comment. We will be making a decision at our regular council meeting next th Monday night, December 10 at that time so if, at this point, unless there's any modification to the agenda, I'll ask staff to make a presentation regarding a Truth in Taxation preliminary budget and levy. Greg Sticha: Thanks Mayor and council members. As the Mayor has pointed out, the Truth in Taxation hearing is a required process by law. The Truth in Taxation hearing is required in the case of raising your levy over the state percentage, implicit percentage increase rate, which I believe for this year was 4.5%. The preliminary levy that Chanhassen set in September only increased the levy 2.9%, therefore legally we were not required to hold a Truth in Taxation hearing but we have in the past practiced going through the Truth in Taxation hearing regardless of the amount of the increase in the levy that we are planning on so we are still having the Truth in Taxation hearing tonight, even though legally we did not have to. The required elements for holding a Truth in Taxation hearing and a, the entire budget process, I just kind of want to briefly go over those. I'm going to present the proposed 2008 budget that was set in September. I'm going to be presenting the proposed 2008 tax levy that was set in September. We will be discussing any major changes to the budget and levy that took place in 2008 compared to 2007, and then we will hold the public hearing and take input and comments after my presentation and th as the Mayor's pointed out, we will be adopting the levy and budget on December 10, next week. Just to kind of give a short backdrop on what the budget process all involves. We begin talking about budget as early as June actually, but in July our department heads submit Chanhassen Truth in Taxation Hearing - December 3, 2007 preliminary budgets to the city manager and myself. We review those budgets and then in August come to City Council with a recommended or early preliminary levy and tax levy for the upcoming year. During those work sessions we discussed various alternatives and funding ideas for all kinds of different things, including levies for our general fund, our capital improvement, replacement fund and our debt levies. At that point in September we then set a preliminary levy. th The preliminary levy set on September 15 is what the Truth in Taxation's property tax notices go out based on. At that point we cannot lower, or cannot increase our total levy dollars that we request from our residents. We can only lower it after we set the preliminary levy in September. In October and November we hold detailed budget meetings and go through each department by department's budget request for the upcoming year and discuss other items affecting the levy, including debt levies and our, like I said, our capital replacement fund levy, and then this evening we hold a Truth in Taxation hearing to take public comment and input on the proposed th preliminary levy and preliminary proposed levy, and then on December 10 we will adopt the budget. Let's take a look at what has changed from our 2007 budget versus our 2008 preliminary budget that we passed in September. Looking at just the general fund expenditures, the 2007 budget had a total of $9,062,000 and budgeted expenditures 2008 we are requesting $9,336,000. A 3% increase in total spending in the general fund. And you can see the breakdown by areas of function. General government, law enforcement, public works, community development. You'll note the largest increase dollar wise is in law enforcement and percentage wise. In the 2008 budget we do have a new position in the budget for law enforcement totaling about $100,000. This makes up quite a large percentage of the increase in total spending in the general fund. Revenues also went up by 3% representing a balanced general fund budget. We presented a general fund budget back in September. Property taxes had increased 4.7%. Licenses and the permits, we are projecting a decrease in that revenue line item due to the down turn in the current market for building. And the other slight increase, there was a slight increase in fines and penalties, dollar wise it's, percentage wise it looks much larger but we did increase the amount for fines and penalties in that category by I believe it was about $15,000. Look at our history of our spending in our general fund. You can see that the spending increase this year was 3%. Last year we had an increase in spending of 5%, and the previous years before that, taking a look at this chart show you the increases in general fund spending. What factors changed in 2008 budget? Our operating expenditures remain relatively flat. Total general fund expenditures increased to 3%. The police contract accounts for 74% of the increased expenditures, and that would be the one additional officer and the 5% increase for wages. That makes up 74% of the increase in the total general fund budget. Then we need to talk about what effects the actual levy or the amount we are asking from our residents to help fund the operations of the city. The general fund levy with an increase of 4% based on the preliminary levy that we set earlier this year. We kept the capital replacement fund levy the same. The sealcoating levy went up slightly based on a schedule that we've had in place for 5 years now. This is the last increase in the sealcoating schedule. At this point forward the levy for that will remain flat unless we were to need additional funding for sealcoating our streets, at which point we would certainly be coming to council for, asking for additional funding in this area. Our debt levies then are the other remaining levies that we need to ask for money. General obligation debt had a large increase. That increase is mostly due from, we had to increase the levy for our 212 bonding, which is now nearing completion and we will begin our first bond payment to the State of Minnesota next summer in August of '08 so that's the main reason for the increase in the general obligation debt. And on this schedule you do see, I just noticed that, a typo. You see the local street 2 Chanhassen Truth in Taxation Hearing - December 3, 2007 improvement levy of $100,000. At the time we set the preliminary levy, that $100,000 was actually up under the special assessment debt levy. We will be discussing that amount further in work sessions and then next week as well. Market value levies. The market value levies are different than the regular debt levies. These levies are paid for by the residents only in our community. Not by our commercial industrial users. They have a little, they're voter approved levies so that is the reason behind why, who's paying for the levies. Who's paying for that. I should note the amount of $425,914 for the park referendum levy, that bond payment is actually higher than that but in our levy, debt levy schedule we do plan on using cash reserves to buy down that amount and that is the difference in that amount. The debt levy in total, with the use of cash reserves, will remain the same as the prior year. There is no increase in the debt levy. The net tax levy effects, based on the preliminary budget and levy we set will, is a general fund levy increase of 4.7%. A total tax levy increase of 2.92%. We put together a schedule of 6 example properties in the city of Chanhassen and based on their Truth in Taxation statements that they received here within the last few weeks, noted the increase in value of these 6 homes and the percent that the city's property tax bill will go up for each of those properties. You'll notice that in most cases property owners will see either the same property tax bill or a slight decrease in their property tax bill. At this point staff's recommendation would be to hold a th continuation hearing if needed on Monday, December 10 and adopt the levy and budget at that point in the evening. And with that I will answer any questions about the preliminary budget and levy that we set in September. Mayor Furlong: Thank you. Is there any questions for staff at this point? Councilman Litsey: I just want to thank you for the hard work you've done and others as well for a good job and presenting to the council the numbers and to the city and helping us with this decision…thank you. Greg Sticha: Appreciate it. Mayor Furlong: Good. Any other questions at this point? If not then, without objection we'll open up the hearing for the 2008 Truth in Taxation hearing. Invite any interested parties to come forward and speak to the council. You're the only one. Councilwoman Tjornhom: You know a joke or anything? Councilman Peterson: Motion to close the public hearing. Mayor Furlong: Thank you. Is there any reason, you had said, or before I entertain that motion Councilman Peterson, the last comment was if necessary on the continuation. What would require an if necessary? If with volume or just the desire of the council? Greg Sticha: In either case you could continue the hearing. If there was an over abundance of volume tonight, that would be one reason. Mayor Furlong: Okay. 3 Chanhassen Truth in Taxation Hearing - December 3, 2007 Greg Sticha: Or if for some reason council wanted to open the hearing again at the next meeting to give another opportunity, they could do that. Would not be required to do so, but they could. Mayor Furlong: I see. Okay, thank you. Seeing we don't have an over abundance on that category, it would be strictly if we wanted to. So Councilman Peterson has made a motion, which I will now entertain to close the Truth in Taxation public hearing. Is there a second? Councilwoman Ernst: Second. Mayor Furlong: Made and seconded. Any discussion on closing that? Seeing none, we'll proceed with the vote. Councilman Peterson moved, Councilwoman Ernst seconded to close the public hearing for the Truth in Taxation hearing. All voted in favor and the motion carried unanimously with a vote of 5 to 0. Mayor Furlong: The Truth in Taxation hearing is closed. Given that there's nothing else to come before the council this evening on this matter, is there a motion to adjourn our Truth in Taxation hearing? Councilwoman Ernst moved, Councilman Peterson seconded to adjourn the Truth in Taxation hearing. All voted in favor and the motion carried unanimously with a vote of 5 to 0. The Truth in Taxation hearing was adjourned at 7:15 p.m.. Submitted by Todd Gerhardt City Manager Prepared by Nann Opheim 4