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Home My WebLink About12-01-1993 Budget Hearing PacketMIXUTES OF HIE 1994 HLDGET HEARING CITY OF ORONO HELD DECEMBER 1, 1993 (#1) ROLL The Council met on the above date with the following members present: Mayor Edward Callahan. Gabriel Jabbour. and JoElIen Hurr. Charles Kelley arrived at 7:18 p.m. J. Diann Goetien was absent. The following represented City staff; City Administrator Ron Moorsc, Finance Director Tom Kuehn, Public Works Director John Gerhardson and Recorder Lin Vec. Mayor Callahan called the meeting to order at 7:06 p.m. .Mayor Callahan explained the purpose of the meeting is to comply with the Truth in Taxation laws. (#2) OPEN PUBLIC HEARING, 7:06 P.M. - 7:55 P.M. The Affidavit of Ihtblication was noted. (#3) BUDGET AND LEVY INFf)R.MATION City Administrator .Moorse explained the proposed budget which reflects a major effort to hold down general operating costs. The General Fund budget covers general operating costs of the City. The overall increase in the General Fund is .64%. Moorse pointed out that the Council portion of the budget increased by appro.ximately S5.000 because the LMCD fees have increased. The Elections portion of the budget increased because there is an election held in 1994 which did not occur in 1993. Engineemg costs arc higher because these fees have been taken out of the street maintenance budget so they can be combined into one account. Although only a .6% increase is proposed in the budget. City Administrator Moorse explained that the tax levy shows a 5.2% increase for the general fund. This is because interest revenue had been transferred from the building fund .n past years which now needs to remam m the building fund to be used for the debt serv ice on the new City facilities bond. The total levy for the City budget is increasing S147,lo3 or 8%. Two c.iuscs for the increase ore: 1. 1992 Bvind levy for the City’s portion of the Stubbs Bay Sewer Project. 2. 1980 Watei and .Sewer Bonds. Moorse presented a chart s.bowing the effect of the tax levy increase on homes in Orono with valuations of $100,000. S200.000 and $300,000. Generally there a about a 3.1% increase if the value suys the saiiK as the last year. MINUTES OF TIIF: 1994 BUDGET HEARING CITY OF ORONO HELD DECEMBER I. 1993 Moorse compared the City of Orono’s lax rate with other cities of Hennepin County with populations over 2.000. Orono was ranked the 4lh lowest in 1993 and would be Lie 3rd lowest in 1994. Moorse discussed tlie staffing and compensation levels. 'Fhere has been little change in the last few years Hie number of patrol officers and maintenance workers compnse significant numbers of the total employees. He noted that in 1992 there were 11 patrol officers and 3 lieutenants In 1993 that chanced when a lieutenant position was eliminated and a patrol olticer was added to increase strength on the street. He also pointed out that the temporary- part-time employee numbers change due to elections (judges) in election years. Moorse explained a chart relating to employee compensation. Tlie enterprise fund is funded by fees and not taxes. There is only a 1.5% total compensation increa.se (wages and benefits) trom 1993 to 1994. The Truth and Taxation law requires the City to provide a list of independent contractors .Moorse indicated that in the City’s piosecuiion serv-ices. Orono is cooperatmg with severa o Fire protection is provided by four neighboring cities - .Maple Plain. Mound. L*)ng Uke a Wayzaia. A number of maintenance and repair contractors were also listed. Hun asked Ihiw Moorse arrived at the ranking of Orono's tax rate since other cities are also in Ihe potcess of budget hearings. Moorse responded that this information was provided from the County on "proposed" budgets. Mayor Callahan noted the police department is the major cost of mnnmg me jpr^ one-third of me budeet. This is a service mat ts also contracted out to Lhe cities o. .vlinnetonlu Beach. Long Lake and Spring Park so mere is some revenue generated from mese contracts amounting to one-third to one-half of me police budget. Mavor Callahan reiterated that the major increase in levy is due to a an increase in costs. The decrease in revenues was caused partly because of me new Funds were being accumulated for the building and the iniercst used tor me general is has changed because money has bee;, spent from m ^'kept’m the interest rates have dropped. Now the interest trom me building hind needs to be kept in building fund to assure mere is funding for the bond payments. Mayor Callahan explained mat the 1992 sewer bonds are tor the Stubbs Bay !l!e clt, r^on ot the cost of the sewer He commued that m recent years Ute Cry has __ MINUTES OF I HE 1994 BUDGET HEARING Cn Y OF ORONO HELD DECEMBER 1, 1993 assumed a portion of the cost of sewer project and that the amount that can be assessed against an individual homeowner is related to the increased value of the land as a result of the sewer installation. This sewer bond is just beginning to be paid off. The 1989 sewer bond was for sewers planned for the area from Sixth Avenue Nonh to Highway 12. At tlie ’.ime the sewer was projected, it was believed there would be considerable development, llie Highway 12 project, the new City facility and lands being taken over by the school district have changed the projected residential development for this area. As a result, the City has to bear the cost of these bond payments until development increases. (#4) PUBLIC CO.M.MFMS Ward Edwards, 2474 Carman Street, asked if the value of his home changes yearly. Mayor Callahan responded that the .Assessor physically visits approximately 1/4 ot the homes in the City each year. Those homes that are not acnially visited are still subject to recalculation of their values based on various assessing technii^ues. .Mayor Callahan suggested .Mr. Edwards attend the property tax hearings in April. He also indicated the tax information was re.adily available if Mr. Edwards contacted City statf with tunher questions. Hurt added that if there were building improvements, the value may change as the Assessor gets a copy of the building permits. Doug Hickey, 4301 Wayzata Boulevard, commented that the assessed value ot his home has averaged a 12% increase each year over the past six years. Jabbour explained tliat the budget is determined by the City and then the amount of money needed is distributed among all the homes. Mayor Callalian continued that the budget is sent to the Ci^untv for calculation as to how the taxes are spread. Homes are classified differently so each statement is different. Tlie tax statement reflects the amount of money each entity receives from the taxes paid. Kdlev Mplained ihal the .St.ttc legislature changeil the lax rate pereentage of th^alue of homes anO how the money is ail.KaieJ At on; time there was a and 2% rate The 3% rate has been eliminated on the larger, m .re afllueni homes TTus resulted m the lower value homes paying a bigger percentage Homes ov.-r $i:8.000 are now mxed at a rate of 2%. Carl Johnson. 3105 North Shore Drive, suied that when he received his first home 'aluatiom it was 30» over the previous year. This was readjusted by the Assessor to 19%. Wten received his statement, the increase was 10% He ashed if there was a state law «1 “' increase of market value to 10% per year Mayor Callahan responded thete was not such a law MINUTKS OF THE 1994 BUDGET HEARLNG CITY OF ORONO HELD DECEMBER 1. 1993 but a law that limited the amount the actual real estate taxes paid could increase in one year to 10%. This could be 12% now. If the taxes to be paid were over a 10% increase, tltere was a tax form available to apply for a refund. John Hcdberg, 4740 NonJi Ann Drive West, commented that the market value on his home went up 6.3%, yet the Orono taxes went up 12.3% based on a relatively small increase in the budget and asked if there was an explanation. Mayor Callahan thought it may be related to the classification changes made by the State legislature. Jabbour added that originally homes valued at $0 - $72,(XX) were taxed at a rate of 1 %. from $72.OCX) - $115.000 at 2% and over $115,000 at 3%. Since the third tier was eliminated, basically homes over S72.(XX) are taxed at 2%. This actually causes a double increase to those homes in the middle range. They are asked to pay more from the Citv and thev are absorbine the cost from I..e third tier. Doug Hickey requested copies of the overheads presented at the meeting. Mayor Callahan encouraged anyone with further questions to contact the City Administrator. llurr asked about the income vs. the budget at the golf course. City Administrator Moorse confirmed that in recent years, revenues have exceeded expenditures. riie public hearing closed at 7:55 p.m. (/K5) COUNCIL ACTION Mayor Callahan aimounced that the 1994 budget ai>d levy will be adopted at a meeting to be held on Monday, Decemlv^r 13, 1993 at 7:15 p.m. ADJOURNMENT The meeting was adjourned by Mayor Callahan at 7:55 p.m. AlTIsr: Edward J. Callahan. Jr., Mayor 1. 2. 3 . 1994 BUDGET HEARING CITY OP ORONO DECEMBER 1, 1993 7:00 P.M. ORONO COUNCIL CHAMBERS Roll Call 4. 5. Open Public Hearing - Affidavit of Publication Budget and Levy Information - Proposed Budget - Proposed Tax Levy - Staffing and Compensation - Use of Independent Contractors Public Comments Coxincil Action 11 A Announce that the 1994 budget and levy will be adopted at a meeting to be held on Monday, December 13, at 7:15 p.m. B.Reconvene hearing to December 8, 1993, at 7:00 p.m. for further comment. 0 .Adjournment J Affidavit of Publication I 199} ^‘^OFOBOnio Slate of Minnesola. County of Hennepin. Bill Holm, being duly sworn on oath, says that he is an authorized agent and emoloyee of the publisher of the newspaper known as THE LAKER, Mound, Minnesota, and has full knowledge of the facts which are stated below; • • p The Oroho Cit the amount of costs of service The discussioi budget, indue consultants ant year, and the p All Orono resic council to expi amount of prop ^.4 Your participa A. ) The newspaper has complied with all the requirements constituting qualifications as a qualified newspaper, as provided by Minnesola Statute 331A.02, 331A.07, and other applicable laws, as amended. B. ) The printed ^ I'jfJlCCj ____ which is attached was cut from the columns of said newspaper, and was printed and published once each week for / successive weeks: It was first published Monday, the —.22.^^day of /Jo* 'ft' In J 1Q 93 and was thereafter printed and published every Monday, to and including Monday, Subscribed and sworn to me on this / lainurti 93 X ^COUNT^ (1) Low*si~cfass ‘i‘«i ''rat* by oomnwrdal us«n> for comparable apaca : $ 10.76 par Inch. (2) Majurrum rata aMoaad by law tor above manar: |10.76. (3) Rata actually charged tor above manar; $5.96 par inch. Each addtional auocaaaiva week: $4.12. Ndtice of Proposed Property Taxes The Orono City Council will hold a public hearing on its budget and on the amount of property taxes it is proposing to collect to pay for the costs of services the city will provide in 1994. The discussion will describe the increases or decreases of the total budget, including employee salaries and benefits and the costs of consultants and other independent contractors for the prior year, current year, and the proposed budget year. Attend the Public Hearing All Orono residents are invited to attend the public ‘hearing of the city council to express their opinions on the budget and on the proposed amount of property taxes on: Wednesday, December 1, at 7:00 p.m. Orono Council Chambers 2780 Kelley Parkway Orono TOj Mayor and City Council FROM:Ron Moorse, City Administrator X DATE:November 24, 1993 Op SUBJECT: Revised 1994 Proposed Budget °%o The revised 1994 proposed budget is attached. The revised proposal reflects efforts to control costs through a number of cost reduction initiatives. The goal is to limit the expenditures necessary for the general operation of the city to a minimum amovnt, to enable the city ,o address significantly increased debt service needs. The cost reduction initiatives include the elimination of the police K-9 program, a reduction in the street overlay program, and a reduction in funding for consultant services for special projects. Total Budget and Tax Lew , r, ^ .u o The total proposed budget including the General Fund, the Sewer, Water, and Golf operating bi'’gets and Debt Service is $5,394,416 versus $4,996,067 in 1993. This is an increase of $398,349 or 8 0% The tax levy needed to fund this budget is $1,976,636 versus $1,829,473 in 1993. This is a $147,163 or 8.0% increase over the 1993 levy amount. General Fund Budget ^ The two expenditure areas most affecting the tax levy are tne General Fund expenditures and Debt Service expenditures. The General Fund budget is $3,152,666 versus $3,132,572 in 1993. is a $20,094 or .6% increase over 1993. The tax levy required to fund the General Fund Budget is $1,633,165. This is an $80,248 or 5.2% increase over 1993. The levy increase is greater than the $20,000 expenditure increase because the transfer of interest revenue from the Building Fund to t.ne General Fund has been reduced from $84,695 in 1993 to $0 in 1994. This was done to enable the full Building Fund interest earnings to be used to pay the deot service on the HRA (city facilities) bonds. The total amount budgeted for debt service for 1994 is $1,247,500. This is a $364,074 or 41% increase over the 1993 budget. This increase is due to three items: 1.The first principal payment is due on the Stubbs Bay sewer project bonds ($85,000). 2.The first principal payment is due on t)»e HRA bonds ($145,000). 3 .The total remaining principal on the 1980 ^nds will ^ paid when these bonds are called in 1994. This is a one time cost to close out the funds ($150,000). Revised 1994 Proposed Budget Cont. November 24, 1993 page 2 The amount of tax levy being used to fund debt service expenditures has increased from $276,456 in 1993 to $343,471 in 1994, an increase of $67,015 or 24%. This increase is due to two items: 1. This is the first budget that includes a levy for the Stubbs Bay sewer project ($14,209). 2. The budget reflects the initiation of a levy for the 1989 sewer and water bonds ($60,458). The levy for the 1988 water and sewer bond debt service includes the initially proposed levy of $25,000, $30,282 shifted from the General Fund due to expenditure reductions in the General Fund, and $13,176 shifted from the levy for the 1980 bonds, due to these bonds being called. The attached table titled City of Orono Tax Levies shows the various levies included ii. proposed budget. The proposed budget does reflect efforts to address significant financial issues facing the city. These efforts will put the city on a solid financial foundation for the future. Although the proposed tax levy increase is greater than would be preferred, taking this action now will prevent the need for even more substantial increases in the future. Slr552,917 $1,633,165 $80,248 5.2%13,886 0 (13,088 -100.0%4,745 4,736 .It -0.2%43,131 43,059 (72]-0.2%0 68,458 68,458 —0 14,209 14,209214,792 213,009 (1,783)—0.8%1,029,473BSeSie9SSSZS9BtSStXSS=SSB 1,976,636Bsssssssssasstsa 147,163 8.0% 'ART-time AR TEMP5 249212 ^i^:y of oronoEMPLOYEE COMPENSATION COSTS COMPARED TO THE GENERAL FUND AND ENTERPRISE FUNDS BUDGETS1992ACTUAL1993BUDGET 1994PROPOSED$1,682,314 $3,024,890 $1,756,523 $3,132,572 $1,792,865 $3,152,66655.6%56.1% 56.9% $262,319 $1,297,294 $261,459 $1,300,426 20.1% PURPOSE NumberofVenders 1992 1993 1994Assessor1$68,380 $70,735 $72,000Legal (prosecution)1 $30,899 $31,200 $32,500Legal (civil)1 $32,067 $40,000 $50,600Janitorial1$8,781 $13,725 $13,957Radio Dispatcli 1 $16,538 $17,500 $17,500Fire Protection 4 $195,502 $192,428 $199,473Engineering1$22,948 $18,130 $21,300Curbside Recycling 1 $63,180 $64,000 $64,000Data Processing 1 $65,789 $66,000 $73,500Water & Sewer Mains & Lift Station Maint/Repairs 14 $69,970 $47,145 $50,700 Street Maintenance 5 $100,000 $100,000 $90,000 Automotive Equip Maint/Repair 8 $30,250 $26,900 $20,100 Misc Equip Maint/Repair 10 $9,550 $12,250 $12,050 Insurance Agent 1 $7,000 $7,250 $7,650 Recorder 1 $5,500 $5,500 $5,500 Park & Rec Program 1 $2,625 $2,500 $3,000 $70,735 $72,000$31,200 $32,500$40,000 $50,600$13,725 $13,957$17,500 $17,500$192,428 $199,473$18,130 $21,300 $64,000 $64,000 $66,800 $73,500 $47,145 $50,700 $100,OUO $90,000 $26,900 $28,100 $12,250 $12,050 $7,250 $7,650 $5,500 $5,500 $2,500 $3,000 CITY 1993RATESSSCSBBSZSZS 1993RANKsbsbbsbbb CITYBBBBBSBBSBB3 1994RATEBBBSBSSSa 1994RANKDEEPHAVEN13.976 %1 DEEPHAVEN 14.786 %1EDINA15.092 %2 PLYMOUTH 16.007 %2MEDINA15.257 %3 ORONO 16.104 %3ORONO15.624 %4 EDINA 16.199 %4PLYMOUTH17.390 %5 ST LOUIS PARK 20.156 %5CORCORAN17.783 %6 WAYZATA 20.195 %6HAYZATA19.279 %7 OSSEO 20.276 %7OSSEO19.433 %8 SHOREWOOD 20.327 %8MOUND19.695 %9 MINNETONKA 20.428 %9MINNBTRISTA20.009 %10 MINNESTRISTA 20.654 %10 1993 1994 INCREASE(DECREASE)PERCENT + /_$1,552,917 $1,633,165 $80,248 5.2%104,257 122,000 17,743 17.0%455,218 457,563 2,345 0.5%804,350 809,453 5,103 0.6%61,000 66,000 5,000 8.2%35,000 30,000 (5,000)-14.3%19,400 21,400 2,000 10.3%100,430 13,085 (87,345)-87.0% $3,132,572 =:rs = =ssE = 53tssr=5 $3,152,666 $20,094 = = s=:s:ssss=s=s 0.6% S S =S S 3 8 n Revenue Source 1993 1994Taxes49.6%51.0%Penalties & Interest 0.0%0.0%Licenses & Permits 3.3%3.9%Intergovernmental 14.5%14.5%Service Charges 25.7%25.7%Fines & Forfeits 2.0%2.1%Interest 1.1%1.0%Miscellaneous 0.6%0.7%Transfers In 3.2%0.4% TOTAL REVENUE 100.0% SSS S s S S3 100.0% s s; = 3s r= r=