11-27-2023 City Council Agenda Packet

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AGENDA ITEM Prepared By: RJO Reviewed By: Approved By: budgets that are not formally adopted. a. General Fund Expenditure Budget. The 2024 expenditure budget is $11,536,630 which is an increase of $543,353 (4.9%) over the 2023 budget. The largest increase is in Personal Services (Wages and Benefits) in the amount of $462,700. Professional Services is increasing by $319,148 (19.34%) as the result of an increase of $138,638 in the Long Lake fire budget and $100,750 in IT Services. Transfers to Other Funds is decreasing by $200,000 (50.0%). This reflects the creation of the New Fire Capital Fund for fund fire equipment purchases. b. General Fund Revenues. For revenues, the General Fund budget also totals $11,536,630 and is increasing by $543,353 (4.9%). The General Fund property tax levy represents 56.7% of the revenue budget, and is increasing by $904,100. The rest of the General Fund revenues are from non-tax sources with the largest of these being from service contracts with surrounding cities. By working cooperatively with neighboring cities, we are able to provide enhanced service at a lower cost by eliminating overhead and duplication of service. 6. Special Revenue Funds. The special revenue funds that budgets are adopted for are the Park Fund, The Drug Forfeiture Fund, and the TIF Fund. Special revenue funds by definition have a primary source of revenue that is dedicated for a specific purpose. In the Park Fund the primary revenue source is park dedication fees collected from developers. This fund also includes tax levy dollars. By state law, park dedication fees must be used for parkland acquisition and development. The Drug Forfeiture Fund receives its primary funding from the Police Department’s drug and alcohol enforcement activities. The funds must be used for drug and alcohol related activities. The TIF Fund is used to account for revenues related to the Orono Woods Senior Housing Development. The Special Revenue funds do not have a significant impact on the tax levy. 7. Debt Service Funds. Debt Service Funds are used to service the debt on the City’s outstanding bonds. A formal budget is not adopted for the debt service funds. However, the city is required by statute to levy the amount needed to service the City’s outstanding debt. The 2024 levy for debt service is $840,000. 8. Enterprise Funds. The Water, Sewer, Stormwater, and Recycling Funds are designed to account for the business type activities of the City. These funds do not receive any property tax revenue and do not impact the levy. The goal for the Enterprise funds is to be fully funded by rates without depending on special assessments and bonding for infrastructure improvements. 9. Construction Funds. The City does not adopt formal budgets for construction funds. Possible projects for these funds can be found in the City’s CIP. The 2024 CIP will be adopted at the December 11th meeting. It is a planning tool only; approval of the CIP not approve or authorize any purchases. 10. Summary. As mentioned throughout this memo, the property tax levy, the General Fund budget, the CIP, and other budgets will be adopted on December 11th. Tonight’s meeting is the public’s chance to comment on the budget and tax levy prior to adoption. If the Council would like to make any changes based on the public’s input, now it the time to make those changes. 11. Staff Recommendation. Staff would like direction on any changes that the Council would like made to the General Fund Budget and Tax Levy before their final approvals on December 11, 2023. COUNCIL ACTION REQUESTED Direction on any changes to the General Fund Budget or Property Tax to be brought to the council for approval on December 11, 2023. Orono City Council | Monday, November 27, 2023 | Page 39 of 79