09-25-2017 Council Packet - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, September 11, 207 7:00 o'clock p.m. 12. 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT PRESENTATION — Continued Walsh stated based on the audit, it looks like in general the City is in a strong financial position and that it is worth noting that Orono is the second lowest of 45 communities in Hennepin County for city tax rate. Walsh noted Orono does not levy special assessments for roads and that road improvements are included within the City's budget. Walsh noted under the General Fund category, even though it says the City has $4.5 million on hand, the City is required to keep 45 percent of its fund balance in reserve at all times. The City Council took no formal action on this item. 13. 2018 BUDGET Ron Olson, Finance Director, addressed the City Council regarding the 2018 preliminary tax levy and budget. The preliminary tax levy will be set at the September 25 meeting and the final levy and budget will be approved on December 11, 2017, with the truth -in -taxation meeting being held prior to final adoption. As it relates to the General Fund budget, the City's overall revenues are increasing by 2.6 percent. Over the past couple of months the City Council has reviewed the budget in detail and made some cuts to the budget. Property taxes account for 52 percent of the City's revenue, followed by public safety charges and permits. Olson stated a property tax levy of 52 percent is very good compared to most other cities in the state. Olson noted those cities are primarily dependent on the tax levy to survive but that Orono has other sources of revenue which would help them get by in the event the City has difficulty collecting property taxes. The City's total expenditures are $8,187,901, which is an increase of 2.5 percent over the 2017 budget. That increase is a result of personal services going up by $213,000, which is greater than the actual increase proposed in the budget. Olson stated the City Council tried to keep the levy increase down by making cuts in other places. Wages and benefits comprise 66 percent of the budget, followed by professional services and supplies and maintenance. The police and fire departments comprise 58 percent of the City's budget, with building and zoning at 9 percent, and street maintenance at 6 percent. Olson stated the $213,000 increase is due to a wage increase for police department employees, other city employee benefits, turning a part-time position into a full-time position for the golf course and parks, the 2018 elections, software licensing, and a new police records system. To help offset that increase, some decreases were made in building inspection services, building and zoning professional services, and there was a decrease of $20,000 in fuel costs for the police department and public works. Olson stated the City Council made those cuts to keep the levy as low as possible. In addition, the Pavement Management Plan was decreased by $383,000. The total of all levies is $5,556,051. Since 2011, the Orono levy has increased significantly less than the state average. Olson stated the League of Minnesota's tax report shows that on average 40 percent of a person's property tax bill in Orono goes to the county, 37 percent goes to the school, 15 percent goes to the City, and the state is at 9 percent. The average for other cities is 29 percent of their property taxes going toward city expenses and services. Page 3 of 17