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A. 2012 Budget DiscussionBuilding Inspections Phone: 952.227.1180 BACKGROUND Fax: 952.227.1190 Engineering The following is a recap of the 2012 budget timeline to date: Phone: 952.227.1160 Fax: 952.227.1170 June Staff informed the city council that new construction is 1.16% for taxes payable in Finance 2012, while the average home decreased 3.93% in taxable market value. Staff Phone: 952.227.1140 also reviewed the budget calendar with the council. Fax: 952.227.1110 Park & Recreation Aullust Phone: 952.227.1120 Department budgets were presented to the council. The assumptions used in Fax: 952.227.1110 preparing the 2012 budgets included: a 1.5% wage increase for employees, establishing building permit revenue at the same level as 2011, an increase in Recreation Center healthcare costs of 15 %, and a 1.16% increase in new construction that resulted in 2310 Coulter Boulevard approximately $119,000 new tax levy dollars for 2012. Phone: 952.227.1400 Fax: 952.227.1404 Staff also presented the following three scenarios for council consideration: Planning & . Scenario #2: This scenario includes an increase in the total levy of Natural Resources CITY OF Phone: 952.227.1130 previous year of $156,500 or 1.52 %. Included in that amount is $119,000 CUMNSEN MEMORANDUM www.ci.chanhassen.mn.us TO: Mayor and City Council 7700 Market Boulevard 7901 Park Place Phone: 952.227.1300 for the fire department to keep competitive with call pay and training PO Box 147 dollars, and keeping the levy for fire station #3 in place. - Chanhassen, MN 55317 FROM: Greg Sticha, Finance Director t0 DATE: November 14, 2011 Administration Phone: 952.227.1100 Fax: 952.227.1110 SUBJ: 2012 Budget Discussion Building Inspections Phone: 952.227.1180 BACKGROUND Fax: 952.227.1190 Engineering The following is a recap of the 2012 budget timeline to date: Phone: 952.227.1160 Fax: 952.227.1170 June Staff informed the city council that new construction is 1.16% for taxes payable in Finance 2012, while the average home decreased 3.93% in taxable market value. Staff Phone: 952.227.1140 also reviewed the budget calendar with the council. Fax: 952.227.1110 Park & Recreation Aullust Phone: 952.227.1120 Department budgets were presented to the council. The assumptions used in Fax: 952.227.1110 preparing the 2012 budgets included: a 1.5% wage increase for employees, establishing building permit revenue at the same level as 2011, an increase in Recreation Center healthcare costs of 15 %, and a 1.16% increase in new construction that resulted in 2310 Coulter Boulevard approximately $119,000 new tax levy dollars for 2012. Phone: 952.227.1400 Fax: 952.227.1404 Staff also presented the following three scenarios for council consideration: Planning & . Scenario #2: This scenario includes an increase in the total levy of Natural Resources . Scenario #1: This scenario includes an increase in the total levy from the Phone: 952.227.1130 previous year of $156,500 or 1.52 %. Included in that amount is $119,000 Fax: 952.227.1110 in new property tax dollars, thus resulting in a .36% or $3 annual increase www.ci.chanhassen.mn.us in the city portion of the property tax bill for the average home. Scenario Public Works #1 includes a 1.5% wage increase for employees, $20,000 in new funding 7901 Park Place Phone: 952.227.1300 for the fire department to keep competitive with call pay and training Fax: 952.227.1310 dollars, and keeping the levy for fire station #3 in place. Senior Center . Scenario #2: This scenario includes an increase in the total levy of Phone: 952.227.1125 $119,000 or 1.16 %, which is exactly the amount of new construction Fax: 952.227.1110 discussed earlier. This would result in a zero percent increase in the city Web Site portion of the property tax bill on the average home. Scenario #2 reduces www.ci.chanhassen.mn.us the wage increase for employees to 1.0 %, and reduces the funding for the fire department to the same level as the previous year. Under this scenario, the $90,000 per year levy for fire station #3 stays in place. Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow Mr. Todd Gerhardt November 14, 2011 Page 2 Scenario #3: The third scenario includes an increase in the total levy of $29,000 or .28% higher than last year. This would result in a .87% or $8 annual decrease in the city portion of the property tax bill on the average home. Staff recommended setting the preliminary levy at Scenario #1, and the detailed department presentations were prepared and presented based on Scenario #1 at the second meeting in August. Also in August, staff became aware of the impacts of changing the market value homestead credit program to a tax exemption program. The legislature acted on this program in July, and resulted in the city having to lower its levy by $150,000 to minimize the impact on our residents. September The city council set a preliminary levy of $10,236,390, or $31,000 ( -.3 %) less than the 2011 levy. That preliminary levy was essentially Scenario #2 less the $150,000 for the change in the MVHC program mentioned above. At the time, staff's recommendation to accommodate that levy was to adjust the wage increase from 1.5% to 1.0% and to eliminate the additional $20,000 funding for the fire department that was added from last year's fire department budget. October Staff contacted Preferred One, the city's current healthcare provider, for a quote on 2012 rates. Initially they quoted a 14% increase, so staff sought formal bids. Bids were received from Preferred One and Medica, but Health Partners and Blue Cross/Blue Shield declined to quote because they could not be competitive. If you recall, staff budgeted for a potential 15% increase in the healthcare premium. We are happy to report that both quotes came in significantly below staffs projection. Preferred One quoted a 6% premium increase, while Medica quoted a 2.62% increase, with a 13% cap for 2013. Staff has weighed each of the proposals and feels the Medica proposal would meet the needs of the city both financially as well as be a quality provider of healthcare insurance for city employees. The financial impact of selecting the Medica proposal would reduce budgeted healthcare premiums in the general fund by approximately $39,000, almost identical to the amount needed to adjust the budget to the actual preliminary levy set by the council. This allows the wage increase (1.5 %) and fire department funding ($20,000) to remain the same as in Scenario #1, but gets the total levy down to Scenario #2 that was set by the city council for the preliminary levy. fAgregs \budget\2012 budget \11 -14 bud discussion- Ldocx Mr. Todd Gerhardt November 14, 2011 Page 3 November Tonight, staff presents current budget information and looks for any further direction from the council on how to proceed with setting the final levy in December. December The Truth -in- Taxation hearing will be held on Monday, December 5 th at 7:00 p.m. in the council chambers. On Monday, December 12 th , the city council will set a final levy, CIP and budget for taxes payable in 2012. No action is required on this item. ATTACHMENTS 1. Detailed General Fund Expenditure & Revenue Budget 2. Tax Rate History 3. Revolving Assessment Construction Fund 4. Debt Levy Schedule 5. KFS Budgeted Expenditure Comparison 6. Carver County Budgeted Expenditure Comparison 7. KFS Per Capita Spending Comparison 8. Carver County Per Capita Spending Comparison 9. Carver County Tax Rates 2011 10. KFS Debt Per Capita Comparison f. \gregs \budget\2012 budget\] 1 -14 bud discussion- l.docx City of Chanhassen Tax Rate History & Total Levy History TAX RATE TOTAL TAX LEVY Final 2003 Final 2004 Final 2005 Final 2006 Final 2007 Final 2008 Final 2009 Final 2010 Final 2011 Prelim 2012 Tax Capacity Based 39.039 32.922 28.118 26.638 23.7881 23.713 22.993 25.183 26.602 28.607 Market Value Based 0.052 0.05901 0.05383 0.04025 0.035711 0.02716 0.03172 0.0143 0.0148 0.0108 TOTAL TAX LEVY TOTAL TAXABLE MARKET VALUE 2003 2004 2005 2006 2007 2008 2009 2010 2011 Prelim 2012 Amount $ 8,639,167 $ 8,639,167 $ 9,439,754 $ 9,354,890 $ 9,575,778 $ 9,854,695 $ 10,074,565 $ 10,213,190 $ 10,267,390 $ 10,236,390 Dollar Increase - 800,587 84,864 220,888 $ 278,917 $ 219,870 $ 138,625 $ 54,200 $ 31,000 Percent Increase 0.00% 9.27% -0.90% 2.36% 2.91% 2.23% 1.38% 0.53% -0.30% TOTAL TAXABLE MARKET VALUE New Growth 2003 2004 2005 2006 2007 2008 2009 2010 2011 Prelim 2012 Amount $ 1,929,073,100 $ 2,189,556,600 $ 2,490,608,100 $ 2,747,375,800 $ 3,100,092,200 $ 3,312,614,300 $ 3,422,448,600 $ 3,419,013,200 $ 3,281,637,600 $ 3,174,984,000 Dollar Increase 260,483,500 301,051,500 256,767,700 352,716,400 $ 212,522,100 $ 109,834,300 $ 3,435,400 $ 137,375,600 $ 106,653,600 Percent Increase 13.50% 13.75% 10.31% 12.84% 6.86% 3.32% -0.10% -4.02% -3.25% New Growth The 2005 levy included a new levy of $800k for the Capital Equipment Replacement Fund. This increased levy was offset by and estimated $1.15M in available tax levy dollars because of the decertification of the Dowtown & Eden Trace TIF districts. The remaining portion of additional decertification levy dollars was not levied, thus resulting in a significant reason why the tax rate declined in 2005. 1 2003 1 2004 1 2005 1 2006 1 2007 1 2008 1 2009 1 2010 1 2011 2012 New Growth % I Not Available 1 2.90%1 2.28%1 2.71%1 2.92%1 1.82%1 2.45% 1 1.39%1 1.06%1 1.16% The 2005 levy included a new levy of $800k for the Capital Equipment Replacement Fund. This increased levy was offset by and estimated $1.15M in available tax levy dollars because of the decertification of the Dowtown & Eden Trace TIF districts. The remaining portion of additional decertification levy dollars was not levied, thus resulting in a significant reason why the tax rate declined in 2005. Revolving Assessment Fund 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Project Cost 1,200,000 1,700,000 950,000 1,400,000 1,200,000 1,200,000 1,300,000 1,300,000 1,300,000 1,400,000 1,400,000 1,400,000 Assessments 40% (480,000) (680,000) (470,000 40000 (7 , ) (480,000) (480,000) (520,000) (520,000) (520,000) (560,000) (560,000) (560,000) City Share 720,000 1,020,000 480,000 660,000 720,000 720,000 780,000 780,000 780,000 840,000 840,000 840,000 Fund Bal - BOY 1,172,000 802,488 173,218 93,982 (73,723) 53,218 28,955 120,429 240,542 319,387 305,880 264,148 Levy 256,570 437,842 130,680 444,410 450,192 431,698 670,538 664,293 659,378 660,978 653,293 1,114,690 Repayment 550,545 627,842 737,346 790,033 875,199 743,195 717,429 748,814 710,165 716,606 697,281 711,775 Project Costs (1,200,000 1,700,000 ( ) (950,000) (1,400,000) (1,200,000) (1,200,000) (1,300,000) (1,300,000) (1,300,000) (1,400,000) (1,400,000) (1,400,000) Investable Balance 779,115 168,173 91,244 (71,575) 51,668 28,111 116,922 233,536 310,085 296,971 256,454 690,613 MVHC Street Levy & Tsf Interest 23,373 5,045 2,737 (2,147) 1,550 843 3,508 7,006 9,303 8,909 7,694 20,718 Fund Sal - EOY 5,366,920 2,971,232 4,885,992 3,600,000 (56,000) 802,488 173,218 93,982 (73,723) 53,218 28,955 120,429 240,542 319,387 305,880 264,148 711,332 Repayment Schedule 8 yr assmt @ 6% Project Year 2005 $142,000.00 23,000 23,000 23,000 23,000 23,000 23,000 23,000 2006 $34,000.00 34, 000 34, 000 34 ,000 34,000 34,000 34,000 34,000 2007 $209,300.00 209,300 209,300 209,300 209,300 209,300 209,300 209,300 2008 $103,063.00 103,063 103,063 103,063 103,063 103,063 103,063 103,063 2009 $58,795.00 58,795 58,795 58,795 58,795 58,795 58,795 58,795 2010 $122,387.00 122,387 122,387 122,387 122,387 122,387 122,387 122,387 2011 $77,297.25 77,297 77,297 77,297 77,297 77,297 77,297 77,297 2012 $109,504.44 109,504 109,504 109,504 109,504 109,504 109,504 109,504 2013 $75,686.89 75,686 75,686 75,686 75,686 75,686 75,686 75,686 2014 $119,166.60 119,166 119,166 119,166 119,166 119,166 119,166 119,166 2015 $77,297.25 77, 297 77 ,297 77,297 77,297 77,297 77,297 2016 $77,297.25 83,738 83,738 83,738 83,738 83,738 2017 $83,738.69 83,738 83,738 83,738 83,738 2018 $83,738.69 83,738 83,738 83,738 2019 $83,738.69 83,738 83,738 2020 $90,180.13 90,180 2021 $90,180.13 2022 2023 2024 2025 2026 2027 2028 2029 2030 Eliminated Transfer of $50,000, and projects increased to $1.2 million starting in 2015. Suggested Changes Begin Fund Balance (56,000) Replace Lyman Tsf with MSA - Const 885,000 Replace Lyman Park ded tsf with R/A (647,000) Gen Fund Tsf 395,000 YE reconciliations 595,000 New 2011 Beg fund Bal 1,172,000 2023 2024 2025 2026 2027 2028 2029 2030 1,500,000 1,500,000 1,600,000 1,600,000 1,700,000 1,700.000 1,800,000 1,800,000 (600,000) (600,000) (640,000) (640,000) (680,000) (680,000) (720,000) (720,000) 900,000 900,000 960,000 960,000 1,020,000 1,020,000 1,080,000 1,080,000 711,332 1,036,088 1,388,637 1,661,312 1,957,229 2,180,886 2,430,170 2,603,322 1,111, 790 1,109, 990 1,109, 290 1,104, 590 1,106, 490 1,099,090 1, 098, 590 1,098,590 682,789 702,114 714,997 734,321 753,646 779,412 798,736 824,502 (1,500,000) (1,500,000) (1,600,000) (1,600,000) (1,700,000) (1,700,000) (1,800,000) (1,800,000) 1,005,911 1,348,192 1,612,924 1,900,223 2,117,365 2,359,389 2,527,497 2,726,414 30,177 40,446 48,388 57,007 63,521 70,782 75,825 81,792 1,036,088 1,388,637 1,661,312 1,957,229 2,180,886 2,430,170 2,603,322 2,808,206 77,297 83,738 83,738 83,738 83,738 83,738 83,738 83,738 83,738 83,738 83,738 83,738 83,738 83,738 83,738 90,180 90,180 90,180 90,180 90,180 90,180 90,180 90,180 90,180 90,180 90,180 90,180 90,180 $90, 180.13 90,180 90, 180 90 ,180 90,180 90,180 90,180 90,180 $96, 621.57 96, 621 96 ,621 96,621 96,621 96,621 96,621 $96, 621.57 96 ,621 96,621 96,621 96,621 96,621 $103,063.00 103,063 103,063 103,063 103,063 $103,063.00 103,063 103,063 103,063 $109,504.44 109,504 109,504 $109,504.44 109,504 $115,945.88 City of Chanhassen, Minnesota Bond Tax Levies 2006-2029 Debt Levies Totals 2,999.900 2.949,600 4.440,398 10.389,898 2005 C Ref 300 000 300,000 738,515 738 515 13 184 080 2009A @@ 2005 1998A Park 2002A 2010A Subtotal of 2001C 2003A 2004A Subtotal of 1999 2001B - Subtotal of 2000 Subtotal of Total Year of GO Park GO Library GO Refund Market GO Equip GO Equip GO GO GO Impr GO Impr Spec Assmt GO Pub Other General Collection Bonds Bonds 2002A Lib Value Levies Carts Carts Bonds Levies Bonds Bonds Levies Proj Levies Bonded Debt 2006 634,800 486,700 1,121,500 138,814 345,800 484,614 100,000 100,000 122,048 122,048 1,828,162 2007 696,500 489,100 1,185,600 141,380 346,900 468,280 100,000 100,000 122,548 122,548 1,896,428 2008 695,900 490,700 253,795 1,186,600 138,173 346,700 484,873 100,000 100,000 122,703 122,703 1,894,176 2009 972,700 491,300 1,809,190 1,464,000 - 297,900 297,900 335,900 - 122,603 122,603 1,884,503 2010 1,809,190 496,400 - 496,400 2013 550,000 593,200 90,000 122,195 122,195 618,595 2011 - 495,400 2014 495,400 592,100 90,000 444,410 2014 126,420 126,420 621,820 2012 2015 232,300 351,648 351,648 90,000 55,000 2015 1,413,998 395,192 1,809,190 351,648 2013 594,000 445,310 445,310 2016 1,377,492 431,698 1,809,190 2017 445,310 2014 90,000 448,880 448,880 670,538 1,809,190 2018 593,600 448,880 2015 2018 1,144,897 446,098 446,098 1.809,190 2019 600,300 90,000 446,098 2016 659,378 452,792 452,792 600,800 90,000 2020 1,148,212 452,792 2017 1,809,190 2021 451,952 451,952 600,400 90,000 2021 1,155,897 653,293 451,952 2018 461,297 461,297 2022 694,500 1,114,690 1,809,190 2023 461,297 2019 607,400 90,000 459,512 459,512 697,400 1,111,790 1,809,190 2024 459,512 2020 2024 457,412 457,412 1,109,990 1,809,190 2025 609,900 90,000 457,412 2021 699,900 465.497 465,497 2026 614,600 90,000 2026 465.497 Totals 2,999.900 2.949,600 4.440,398 10.389,898 - 418.367 1 337 300 1 755 667 300 000 300,000 738,515 738 515 13 184 080 2009A @@ 2005 2008 ## 2010 ++ 2010 Total Levy Excessto" Potential Actual 212 Bonds PW Facility Fire Station Audubon Year w/ CIP Est Pay debt Excess Levy Levy 2006 80,000 2006 1,908,162 285,000 - 1,938,790 2007 80,000 2007 1,976,428 67,238 - 1,909,190 2008 285,000 2008 2,179,176 269,986 - 1,909,190 2009 285,000 2009 2,169,503 460,313 - 1,809,190 2010 337,500 599,300 253,795 2010 1,809,190 - - 1,809,190 2011 336,800 594,000 256,570 2011 1,809,190 - 1,809,190 2012 335,900 593,800 90,000 437,842 2012 1,809,190 - 1,809,190 2013 550,000 593,200 90,000 130,680 2013 1,809,190 - 1,809,190 2014 233,800 592,100 90,000 444,410 2014 1,809,190 - 1,809,190 2015 232,300 590,600 90,000 55,000 2015 1,413,998 395,192 1,809,190 2016 240,700 594,000 90,000 2016 1,377,492 431,698 1,809,190 2017 596,700 90,000 2017 1,138,652 670,538 1,809,190 2018 593,600 90,000 2018 1,144,897 664,293 1.809,190 2019 600,300 90,000 2019 1,149,812 659,378 1,809,190 2020 600,800 90,000 2020 1,148,212 660,978 1,809,190 2021 600,400 90,000 2021 1,155,897 653,293 1,809,190 2022 604,500 90,000 2022 694,500 1,114,690 1,809,190 2023 607,400 90,000 2023 697,400 1,111,790 1,809,190 2024 609,200 90,000 2024 699,200 1,109,990 1,809,190 2025 609,900 90,000 2025 699,900 1,109,290 1,809,190 2026 614,600 90,000 2026 704,600 1,104,590 1,809,190 2027 612,700 90,000 2027 702,700 1,106,490 1,809,190 2028 620,100 90,000 2028 710,100 1,099,090 1,809,190 2028 620,600 90,000 2029 710,600 1,098,590 1,809,190 Totals - - - - - 2,267,000 730 000 12 04 7,800 1,620,000 1,578.297 48.420 31.427.177 1.082.536 These funds to be used to pay doom the debt levy each of the next four years. Ra - The PW facility is for 8 Million and bonding for $7 Million of the 8 Million. «- The Fire Station Facility is now for $2.5 Million with the assumption of no land acquisition costs, building costing $2.0 million and .5 in equipment, the other .5 in equipment to be funded by the Capital Replacement Fund. It also has the assumption of the sale of the PW facility at $1.7 million to be used for construction of the Fire Station, therefore bonding for only 800,000 "^ -The 20018 debt service fund has sufficient fund balance due to prepaid specials, we are able to cancel the levy needed to pay the debt in 2008 8 2009. it is our plan to use that excess ley for General Fund Operations rather than lower the use of Cash Reserves to keep the debt levy flat from the previous year. Q0 - The 2009A Refunded the 2005A Mndot Ioand and 2006A MUSA area improvements. KFS Budgeted Expenditure Comparison 140 City Oakdale Population 27,378 Bud 2010 11,549,334 2011 11,447,965 % Increase From 2011 -0.88% Chaska 23,770 9,915,329 9,996,010 0.81% Chanhassen 22,952 $ 9,618,600 $ 9,727,800 1.14% Champlin 23,089 9,554,351 9,965,931 4.31% Lino Lakes 20,216 8,889,255 8,740,353 -1.68% Andover 30,598 12,219,037 13,267,414 8.58% Farmington 21,086 10,019,844 9,349,781 -6.69% Savage 26,911 11,774,071 11,982,361 1.77% Prior Lake 22,796 10,031,046 10,198,453 1.67% Shoreview 25,043 12,093,196 12,409,115 2.61% Inver Grove Heights 33,880 19,111,100 19,223,500 0.59% Average 25,247 11,343,1971 11,482,608 1.11% * Met Council Population Estimate State Auditors Office City Summary Budget Report for 2010 and 2011 Carver County Cities Budgeted Expenditure Comparison * Met Council Population Estimate Budgeted Expenditures % Increase city Po pulation Chaska 23,770 9,915,329 9 0.81% Waconia 1097 4 4 -6.73% Chanhassen 22 9 952 9 9 1.14% Carver 3 1 1,821,312 2.73% Victoria 7 3 3,609,353 5.16% Average 12 9 116 5 5 0.26% * Met Council Population Estimate KFS Per Capita Spending Comparison 40 city Oakdale Capita Per S pend ing 418 Chaska 421 Chanhassen 424 Champlin 432 Lino Lakes 432 Andover 434 Farmington 443 Savage 445 Prior Lake 447 Shoreview 496 Inver Grove Heights 567 Average 451 Carver County Cities Per Capita Spending Comparison city Chaska Per Capita S 2 0 421 Waconia 422 Chanhassen 424 Carver 489 Victoria 491 Average 441 Carver County Tax Rates city Chaska 2011 Tax Rate" 23.483 Chanhassen 26.602 Victoria 37.421 Waconia 41.891 Watertown 46.296 Carver 47.957 Norwood Young America 48.552 Mayer 59.472 Cologne 61.934 New Germany 62.059 Hamburg 98.404 Average 50.370 * * Based on Urban Tax Rates Debt Per Capita city Champlin Total Debt $ 16 Total Debt Per Capita $ 699 :,n, Rating AA+ Oakdale 24 881 A 0 Lino Lakes 25,171,696 1 Aa2 Shoreview 34,468 1 AAA Chanhassen 35 9 698 9 046 1 9 555 AAA Prior Lake 37 1,631 Aa2 Inver Grove Heights 60 1,800 AA Andover 60 1,973 AA+ Farmington 42,136,719 1 Aa3 Chaska 85 3,582 AA Savage 104 3,898 AA+ Average 47 1,876