A-3. Key Financial Strategy: Two-Year Budget Process and 2017 Budget ExpectationsA -3
Finance
MEMORANDUM
CITY OF
TO: Mayor and City Council
CIIANNSEN
FROM: Greg Sticha, Finance Director b 5
as soon as possible.
7700 Market Boulevard
DATE: June 27, 2016
PO Box 147
Two Year Budget Document: Starting with the 2017 budget, staff has a KFS goal
Chanhassen, MN 55317
for this year to implement a second budget year to the city's budget document. The
Recreation Center
SUBJ: Preliminary 2017 Budget Discussion
Administration
BACKGROUND
Phone: 952.227.1100
in order to make future budgeting decisions more predictable. I have attached the
Fax: 952.227.1110
proposed Finance budget page for the 2017 budget and will review the changes with
Planning &
It is the time of year again when we begin preliminary discussion of the 2017 budget.
Building Inspections
At this work session, the council will receive information on some of the factors
Phone: 952.227.1180
influencing the 2017 budget. Staff would like council feedback on any items of
Fax 952.227.1190
concern and direction for department heads as they prepare their budgets. It should
be noted that staff will review operational efficiencies and effectiveness and identify
Engineering
key drivers affecting cost and service performance levels with the goal of achieving
Phone: 952.227.1160
Fax: 952.2271170
the right balance for each department.
Finance
Attached is a calendar for the remainder of the year reflecting meeting dates and
Phone: 952.227.1140
significant deadlines for completion of the 2017 budget. If any of the dates appear to
Fax: 952.2271110
conflict with other known city deadlines or budget requirements, please let me know
as soon as possible.
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Two Year Budget Document: Starting with the 2017 budget, staff has a KFS goal
for this year to implement a second budget year to the city's budget document. The
Recreation Center
additional budgeted year will not be a council -approved budget but will rather act as a
2310 Coulter Boulevard
guiding financial tool to provide forecasting of additional potential budgetary needs
Phone: 952.227.1400
in order to make future budgeting decisions more predictable. I have attached the
Fax: 952.227.1404
proposed Finance budget page for the 2017 budget and will review the changes with
Planning &
council this evening.
Natural Resources
Phone 952.2271130
Market Value & New Construction Value: Carver County has informed the city
Fax: 9 5 2 2 2 71110
that new construction growth for 2016 is 1.37%. This new construction value has a
direct impact on the budgeting process and will result in an approximate $145,500
Public Works
increase in new tax growth available for 2017. The total market value for the city
7901 Park Place
increased 2.44% for 2016, which is used for 2017 property taxes. Residential values
Phone: 952227.1300
Fax: 952.227.1310
increased by 0.56% in 2016 for taxes payable in 2017.
Senior Center It is extremely important to note that an increase in total market value does not mean
Phone: 952.227.1125 property taxes will decrease, assuming no change in the amount levied from the
Fax 952.227.1110 previous year. In the simplest terns, the tax rate is a product of the total taxable
Website market value and the total tax levy dollars requested.
www.ci.chanhassen.mn.us
Police Contract: We are estimating an inflationary increase in the police contract
could be approximately $90,000 for 2017.
Chanhassen is a Community for Life . Providing for Today and Planning for Tomorrow
Mayor and City Council
Preliminary 2017 Budget Discussion
June 27, 2016
Page 2
Wage Adjustments: We are estimating cost of living increases in the metro area to be around
2.5-3.0%, also we are planning on an additional I% in potential merit based pay included in the
department budgets. A comprehensive compensation plan evaluation is currently being
completed and we will have a better idea of any changes needed and dollar impact after that
report is done.
Healthcare: The city is entering a new healthcare contracting year. Our current experience
rating indicates that we may be expecting a substantial increase in our healthcare premiums for
2017. Staff, with the assistance of our benefits coordinator, is estimating a 20% increase in
healthcare premiums for 2017. It is possible the final bids could even be slightly higher than the
staff -budgeted 20% increase; therefore this item will require additional monitoring later this fall.
The impact to the general fund of a 20% increase in the healthcare contract would be about
$90,000.
RECOMMENDATION
Staff requests feedback from the city council regarding the level of the initial tax levy and how
many alternative budget scenarios the city council would like presented. Staff would also like
feedback on the budget calendar. This feedback will give clear direction to department directors
as they prepare their 2017 and 2018 budget requests.
ATTACHMENTS
1. 2017 Budget Calendar.
2. 2016 Assessment Worksheet Summary from Carver County.
3. Revolving Assessment Construction Fund.
4. Bond Tax Levies Worksheet.
5. Finance Department Budget Sheet.
fAgregs\budget\2017 budget\6-27 prelim bud discussion.docx
Date
Task
Forum
June 17, 2016
Distribute 2016 General Ledger Detail,
2017 & 2018 Operating Budget Preparation Worksheets,
2017-2021 CIP worksheets
June 17, 2016
2017 & 2018 Payroll and Revenue Projections Distributed
June 27, 2016
Discuss 2017 Budget expectations with City Council
Work Session
July 22, 2016
Completed Operating Budget Forms Returned to Finance
July 25, 2016
Review 2nd quarter revenue activity to date & Investment
Work Session
August 5, 2016
PowerPoint for detailed budget discussion distributed
August 19, 2016
Department heads return their departments powerpoint
information
August 22, 2016
Update & Preliminary Budget and Levy Discussion
Work Session
September 9, 2016
All 2017-2021 CIP Requests Returned to Finance
September 12, 2016
Budgets (detailed powerpoint presentation)
Work Session
September 26, 2016
Approval/Certification of Maximum Proposed
City Council Meeting
Preliminary Levy to Carver County Auditor
October 10, 2016
2017-2021 CIP review & discussion of 2017 Special
Work Session
Revenue & Enterprise fund Budgets
October 24, 2016
Review annual Utility Rate Study with Council
Work Session
November 14, 2016
Rate Study, Budget or CIP discussion
Work Session
November 28, 2016
Rate Study, Budget or CIP discussion if needed
Work Session
December 5, 2016
Truth in Taxation Hearing
City Council Meeting
December 12, 2016
Adopt Final Levy & 2017 Budget and 2017-2021 CIP
City Council Meeting
City of Chanhassen 2016 Assessment Summary
■ Commercial/
Industrial
12%
Chanhassen Value Distribution 2016
13 Apartment 13 Other
o Residential
86%
0
E Commercial/In
dustrial
❑ Apartment
❑ Other
nmmerciaUlndustrial
Apartment
Other
Total
2016 EMV
$3,350,379,900
$442,910,200
$62,706,300
$48,254,300
$3,904,250,700
2015 EMV
$3,282,437,900
$420,887,300
$53,465,600
$54,619,400
$3,811,410,200
Total Value Change
$67,942,000
$22,022,900
$9,240,700
($6,365,100)
$92,840,500
New Construction
$49,494,000
$3,168,700
$722,600
$0
$53,385,300
Market Change
$18,448,000
$18,854,200
$8,518,100
($6,365,100)
$39,455,200
• New Construction
1.48%
0.72%
1.15%
0.00%
1.37%
• Market Change
0.56%
4.48%
15.93%
-11.65%
1.04%
2016 Total % Increase
2.07%
5.23%
17.28%
-11.65%
2.44%
■ Commercial/
Industrial
12%
Chanhassen Value Distribution 2016
13 Apartment 13 Other
o Residential
86%
0
E Commercial/In
dustrial
❑ Apartment
❑ Other
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2017 General Fund Budget
Finance (1130)
4010
Salaries & Wages -Reg
2016 to
Overtime -Reg
2014 2015 2016
2017
2017
2018
Account Description Actual Actual Budget
Budget
% Inc/(Dec)
Budget
4010
Salaries & Wages -Reg
4011
Overtime -Reg
4020
Salaries & Wages -Temp
4030
Contributions -Retirement
4040
Contributions -Insurance
4050
Workers Compensation
*
Total Personal Services
4120 Supplies -Equipment
4210 Books & Periodicals
* Total Materials & Supplies
4300 Fees, Services
4301 Fees, Financial/Audit
4310 Telephone and Communications
4340 Printing & Publishing
4360 Subscriptions & Memberships
4370 Travel & Training
4933 Sales Tax
* Total Contractual Services
4703 Office Equipment
* Total Capital Outlay
** Total Finance
SIGNIFICANT CHANGES
2017
4300 Fees, Services
4301 Fees, Financial/Audit
2018
4300 Fees, Services
4301 Fees, Financial/Audit
191,974
208,887
212,300
222,600
4.9%
230,300
68
-
-
-
0.0%
-
650
-
-
-
0.0%
-
27,701
30,452
32,000
33,800
5.6%
36,200
26,478
27,597
29,700
32,200
8.4%
36,000
1,238
1,283
1,500
1,500
0.0%
1,500
248,108
268,219
275,500
290,100
5.3%
304,000
-
-
100
100
0.0%
100
-
100
100
0.0%
100
-
-
200
200
0.0%
70-0-
20,974
36,069
35,000
37,500
7.1%
38,500
24,150
27,119
23,000
26,000
13.0%
28,000
961
658
1,000
1,000
0.0%
1,000
1,105
1,518
700
1,000
42.9%
1,000
352
465
500
500
0.0%
500
3,003
3,945
4,800
4,800
0.0%
4,800
0.0%
50,545
69,774
65,000
70,800
8.9%
73,800
0.0%
- 0.0%
298,653 337,993 340,700 361,100 6.0% 378,000
DESCRIPTION OF CHANGE
Increase to account for continuing increase in credit card processing fees
Increase due to agreed upon audit contract
Increase to account for continuing increase in credit card processing fees
Increase due to agreed upon audit contract