A-2a.2017 Budget, Final Budget Discussion. \ Y A -c9N
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9 CITY OF ClIANIIASSEN
S Chanhassen isa Community for Life-Providing for Today and Planning for Tomorrow
MEMORANDUM
TO: Mayor and City Council
FROM: Greg Sticha, Finance Director
DATE: November 28, 2016
SUBJ: 2017 General Fund Budget& Levy Update
BACKGROUND
On September 26th, the city council set a preliminary levy of$10,795,121, which was $165,500
(1.56%) greater than the final levy for 2016. This amount includes new growth for taxes payable
in 2017, and $20,000 for decertification of TIF #5 and TIF #9. This levy would result in a zero
percent increase in the city portion of the property tax bill on the average home in the city. This
scenario includes 20% for the increase to the healthcare contract, $60,000 for an increase in the
police services contract, additional service hours and costs for Senior Center programming of
$37,000, and 4%increases for employee compensation to meet the pay compensation study
completed.
CHANGES SINCE SETTING PRELIMINARY LEVY
1. Health Insurance—We had budgeted 20% for health insurance premium adjustments as a
part of the preliminary levy. Staff was able to get the final contract for 2017 Health
Insurance premiums down to a 13%increase. The savings amounts to $31,000 in savings for
the General fund.
2. There were a number of health insurance election changes from various city employees that
have selected different coverage since the end of September. The changes amount to an
additional $26,000 in cost to the city's General Fund(the net result of healthcare changes is a
decrease of$15,500).
3. The recent completion of the roundabout at the new river crossing created the need for
ongoing maintenance of the common area. The cost to maintain this area is approximately
$4,000/year and has been added to the park maintenance department budget starting for
2017.
PH 952.227.1100• www.ci.chanhassen.mn.us• FX 952.227.1110
7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317
Mayor& City Council
2017 General Fund Budget&Levy Update
November 28, 2016
Page 2
4. Staff had planned for an increase to the city's workers compensation premiums in the
original budget. However, due to our experience the last several years the League has
informed us that our increase will be about $60,000 (29%)more than what had been
previously budgeted. Obviously, an increase of this magnitude has a significant impact on
the General Fund Budget and overall final levy the city council will set. We have asked our
provider to look at multiple options that would be less costly, including a deductible plan.
The total impact of these changes has the potential for an additional $59,000 in expenses to the
City's General Fund. Therefore, because of these impacts staff will be recommending a final
levy set at the same amount as the preliminary levy in September. Staff would then recommend,
depending on the cost options staff receives for the workers compensation quotes,the reduction
in the revolving assessment street reconstruction levy for any amount not covered by other cost
savings within the General Fund.
ATTACHMENTS
1. Levy Impact Scenarios.
2. Revolving Construction Fund Projections.
3. Bond Tax Levy Schedule.
fAgregs\budget\2017 budget\11-28 final bud&levy discussion.docx
CITY OF CHANHASSEN
TAX LEVY
2017 Budget
2016 2017 Dollar Percent
OPERATIONAL & CAPITAL LEVY Levy Levy Change Change
General Fund $8,017,431 $8,482,131
Capital Replacement Fund (for equipment) 800,000 800,000
Revolving Imp Street Reconstruction 431,698 371,338
Pavement Mgmt Fund (Sealcoating) 93,000 93,000
Total Operational &Capital Levy 9,342,129 9,746,469 404,340 4.33%
DEBT LEVY
General Obligation Debt(212 Bonds) 240,700 0
Public Works Facility 594,000 596,700
Library Referendum 452,792 451,952
Total Debt Levy 1,287,492 1,048,652 (238,840) -18.55%
TOTAL TAX LEVY $10,629,621 $10,795,121 $165,500 1.56%
Scenario#1 Scenario#2 Scenario#3
Levy Levy Levy
Taxes applied to: General Fund $8,419,131 $8,482,131 $8,374,131
Capital Replacement 800,000 800,000 800,000
Pavement Mgmt 93,000 93,000 93,000
Revolving Imp St Recon 479,338 371,338 434,338
Total Levy subject to levy limits $9,791,469 $9,746,469 $9,701,469
Library Referendum $451,952 $451,952 $451,952
GO Debt/212 Bonds - - -
Public Works Building 596,700 596,700 596,700
Total $10,840,121 $10,795,121 $10,750,121
Tax Generation Capacity(Not actual levy, Used only for estimating the impact on the average home)
Prior Year $10,629,621 $10,629,621 $10,629,621
New Construction(1.37%) $145,500 $145,500 $145,500
Decertify TIF#5&9 $20,000 $20,000 $20,000
Total Capacity $10,795,121 $10,795,121 $10,795,121
Percent Change (To avg home city prop tax) after New Growth 0.42% 0.00% -0.42%
Assumes the average home in Chanhassen of$340,000 and approx 0.56%valuation increase
Staff recommendation for preliminary
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