09-26-2016 Council Packet - Laserfiche WebLink

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REQUEST FOR COUNCIL ACTION DATE: September 26, 2016 ITEM NO: 4 Department Approval: Administrator Reviewed: Agenda Section: Name Ron Olson *IV Y"-4 Presentation Title Finance Director Item Description: 2017 Budget and Preliminary Levy Overview The Council has discussed the preliminary budget as part of the last three council work sessions. The preliminary budget and tax levy was presented to the public at the September 12 council meeting. The General Fund budget information presented at that meeting is attachment 1 for your review. As required by state law, the 2017 preliminary tax levy is required to be certified to Hennepin County by September 30th. In order to meet this deadline, the preliminary budget and tax levy needs to be adopted at tonight's meeting. Tax Lew As discussed at previous meetings, the total levy can be increased by $399,250 without increasing the tax rate. The City's tax levy is made up of three parts: General Fund Operating, Debt Service, and the Pavement Management levy. As presented, the current budget would increase the tax levy $399,250. The increase is split between the General Fund ($180,740) and the Pavement Management Fund ($218,500). This would be a total levy increase of 8.06%. The tax rate would remain flat (0% increase) at 17.325. Another option that has been discussed, is to issue bonds to fund upcoming road needs; and to increase the Debt Service levy needed to fund the debt service on the bonds. On a $1,000,000 bond issue, the debt service levy required would be $111,062 in the total debt service levy. A portion of this would be offset by the savings realized by the refunding of the 2008 bonds ($34,563 in 2017). The net increase in the debt service would be $76,499. When added to General Fund levy increase of $180,744 this results in a total levy increase of $257,243 (5.19%). The tax rate would decrease to 16.865%. Bonding The City's bonding authority is governed by state and federal regulations. The resolution authorizing the refunding of the 2008 bonds was passed by the Council at the September 12th meeting. There are no public hearing requirements and the entire process from authorization to closing is about two months. The issuance of new street reconstruction bonds has additional requirements and will take around three months to complete. The street bonds are issued under Minnesota Statutes, Section 475.58, Subdivision 3b which requires the City to adopt a 5 -year street reconstruction plan prior to issuing the bonds. The adoption of the reconstruction plan requires a public hearing and a