07-22-2019 Council Work Session Packet

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MEMORANDUM To: Mayor Walsh and Orono City Council From: Ron Olson, Finance Director Subject: 2019 Budget Date: May 28, 2019 Attachments: 2020 Budget Timeline This item is designed to give the Council a very high level view of the upcoming budget process. At this time the Department Heads are working on their department budgets. Staff is aware of some significant budget increases that are included in this memo. The Council's input at this work session will be used to prepare a draft budget which will be discussed at the July work session. 2020 Budget Factors Taxes 1) According to the most recent numbers from Hennepin County (3/21/19), The City's Taxable Market Value (TMB) has increased from $3,003,119,796 to $3,165,276,316. This is an increase of 5.4%. 2) As a result of the increased in valuation, the City's tax capacity is estimated to increase from $34,672,468 to $36,356,331; an increase of 4.87%. This means that the City's tax levy can increase by 4.87% ($272,000) without increasing the City's tax rate. 3) The Mound service contract includes an inflator based on the CPI -U from July 1, 2018 to June 30 of 2019. At this time the increase will be around 2.0% which is equal to $35,000. Minnetonka Beaches and Spring Park's police service charges will increase by the percentage of increase in officer's wages in 2020. The current contract ends on 12/31/19 so the actual amount will not be known until the contract is negotiated. A 2.5% increase in wages will increase the contract revenue by $14,300. The overall increase for the revenues listed above totals $321,300. This is the amount that the budget can be increased without increasing the tax rate. It is possible that the revenues for building related revenues will again be over budget. In the past, these additional revenues were not budgeted because they will eventually decrease to normal levels. However, the Council 2019 Budget — Page 1