08-22-2016 Council Work Session Packet

Home Browse Search

Engineering & Legal fees increasing by a total of $10,000. To fund the current expenditure budget, the property tax levy for the General Fund would require an increase of $180,744 (4.5%). This increase can be accomplished while maintaining the tax rate at 17.325%. Historical information on the General Fund and the tax levy can be found in attachment C. Tax Lew As discussed in July, 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 ($180,744) and the Pavement Management Fund ($218,506). The levy could be increased by this amount and the tax rate will remain at 17.325. Bonding During the street funding discussion at the July work session, the possibility of issuing bonds was discussed briefly. See attachment C for street funding needs. Staff contacted Ehlers and Associates to obtain an estimate on expected interest rates and required debt payments. Based on the current bond market, a bond sale of $1,000,000 with a 10 year payment schedule, would have a 1.75% interest rate and increase the debt service levy by approximately $110,000. If the Council is interested in bonding for roads, the Council may wish to discuss if the size of the bond sale should be increased to fund additional years of road projects. Staff also discussed the possibility of refunding some of our current bonds. Based on the current bond market, the City could save an average of $29,100 annually (203,740) in interest between 2017 and 2023, if the 2008 Street Reconstruction Bonds were refunded. Staff is requesting direction on pursuing a refunding of this bond issue. If the Council is interested in a bond sale for roads, it would make sense to combine the refunding of the 2008 bonds with the new road bonds. Non -Union Wages As indicated above, the draft budget has been prepared with a 2% COLA included. Information on historical wage increases can be found in attachment H. Also included is a survey of anticipated COLA increases for other Cities. This survey includes cities of various sizes and locations within the State. Decisions Needed The primary decision that needs to be made is the size of the preliminary tax levy that will be approved on September 26. Once the preliminary levy is approved, it cannot be increased. Other items for discussion can be found in attachment H. 2017 Budget — Page 2