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CITY OF ORONO MEMORANDUM <br />DATE: <br />June 26, 2017 <br />TO: <br />Orono City Council <br />FROM: <br />Danielle Amira, Accountant <br />RE: <br />2018 Budget <br />Budget Worksheets for the 2018 General Fund budget were disturbed at the end of May to the <br />department heads. This marks the beginning of the 2018 budget process which will conclude <br />with the adoption of the 2018 budget and tax levy on December l lth 2017. <br />Prior to preparing a draft budget, staff would like Council's input in the areas of the tax levy and <br />spending priorities. This input will assist the Administrator and the Finance Department in <br />determining which department funding requests to include in the draft budget. Budget meeting <br />will be held with the Administrator in early July. Following that a draft budget will be prepared <br />and discussed in July. The Councils input in July will be used to prepare an updated draft budget <br />which will be discussed in August. Input from the August meeting will be incorporated into the <br />preliminary budget which will be televised for the public in September. The preliminary budget <br />and tax levy will be adopted on September 25th 2017. <br />2017 Budget Factors: <br />Revenue: <br />1. Property values have been increasing for the last few years. Last year's increase <br />was 7.8%; the increase for 2017 (taxes collectable 2018) is currently estimated to <br />be 5.2%. While property values themselves do not impact the City's ability to set <br />the tax levy at a level needed to fund operations, the changing values do impact <br />the City's tax rate. <br />2. Revenues for development (building permits, variances, subdivisions) have <br />increased significantly over the past couple of years. However, at this point in the <br />year, it is projected that building revenue budgets will be unchanged from 2017 to <br />2018. <br />3. Interest earnings have continued to be constrained by historically low interest <br />rates. The Federal Reserve did increase rates in 2016, however this increase did <br />not significantly change the City's projected interest earnings. Any adjustment to <br />interest earnings will be based on the Federal Reserve's actions, not on <br />speculation. <br />4. The Mound Service contract included an inflator of 2.5% and will increase by <br />$42,635 for 2018. The Spring Park and Minnetonka Beach contract rates will <br />remain flat at per their new contracts. <br />