2011 Preliminary Budget & Levy Presentation


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Preliminary 2011 Budget & Levy presentation for Hopkins City Council on September 7, 2010.

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2011 Preliminary Budget & Levy Presentation

  1. 1. City of Hopkins 2011 Preliminary Levy and Budget
  2. 2. Truth and Taxation Process Council adopts a proposed levy. Council sets budget meeting dates to discuss budget and receive public comments Budget meeting dates Budget Meeting – Tuesday, December 7th Budget Approval – Tuesday, December 21st
  3. 3. Legislative changes effecting local governments Local Government Aid (LGA) $50,000 earmarked for the Arts Center Unallotted for 2009 & 2010 Back in for 2011 Market Value Homestead Credit (MVHC) Unallotted for 2009, 2010 & 2011 Levy limits in place for 2009 to 2011. No levy limits in 2005-2008
  4. 4. City Planning City council and staff have been meeting and discussing options for maintaining a balanced budget in 2011 and beyond. Options include budget cuts, use of reserves, taxes and new revenue sources. The 2011 General Fund budget details will be outlined prior to adoption of the final budget and levy in December.
  5. 5. Why do levies go up? Increased spending and/or decreases in non tax revenue sources Spending may increase for several reasons Inflationary increases Additional or enhanced programs Infrastructure improvements New debt levies Non tax revenue sources may decrease Slow economy Reduction in government aids Reduced revenues due to economic factors Reduced interest earnings
  6. 6. How do levies go down? The City may reduce its tax levy by decreasing costs or increasing non tax revenue sources. To decrease costs the city could eliminate programs or services it currently provides. The City may also outsource certain city services at a lower cost. The City may cancel or delay capital projects Increased revenues are derived primarily from new fees and increased charges for services. The City may receive grants for specific programs.
  7. 7. What are our tax needs? The 2011 preliminary levy Levy set at $10,138,414 Proposed increase of $212,729 or 2.14% over the 2010 levy. The increase is primarily a result of decreases in revenue sources and unallotment of MVHC Expenditures will increase 2.24%
  8. 8. Tax Levy Options The levy set September 7 will be the maximum levy for 2011. Levy can be reduced but it cannot be increased. Staff continues to evaluate the budget and the final levy and budget may include additional reductions.
  9. 9. 2011 Proposed General Fund Budget and 2011 Preliminary Levy 2011 General Fund 2011 Levy Budget $10,138,414 $10,299,327 This is a increase over This is an increase over last years budget of last years levy of 2.24% $212,729 or 2.14%. The increase is due to Increase is due primarily inflationary increases. to loss of revenue
  10. 10. Budget Challenges Unallotment of MVHC - $232,850 Decreased building permit fees due to economy Decreased interest income Flat or decreasing property values
  11. 11. Budget Impacts Reduced spending across all departments Delayed hiring of staff vacancies Reduced capital expenditures Focus on savings and efficiencies
  12. 12. Development and Taxes City property taxes for 2011 are going to be affected by decisions that were made over past years for various development projects that continue to be added to the tax base. Decertified TIF District 2-1 Added over $500,000 to the tax base Additional projects in the planning stages will add to the city’s tax base for 2012 and beyond.
  13. 13. Fiscal Disparities Changes in the Fiscal Disparities Program affects the tax rate for Hopkins properties. Net Year Contribution Distribution Gain/(Loss) 2011 3,324,078 2,645,025 (679,053) 2010 2,858,921 2,913,208 54,287 2009 2,766,202 2,840,070 73,868 2008 2,450,063 2,405,483 (44,580) 2007 2,116,466 1,997,455 (119,011) 2006 1,952,996 1,836,753 (116,243) 2005 1,526,509 1,673,106 146,597
  14. 14. Fiscal Disparities Local units of government in the Twin Cities metropolitan area are part of a property tax base sharing program. Under this program, a portion of the growth in commercial and industrial property value of each city is contributed to a tax base sharing pool. Each city then receives a distribution of property value from the pool based on market value and population in each city. The Cargill project resulted in Hopkins’ becoming a net contributor.
  15. 15. Financial Impacts Arts Center debt paid off 8 years early Construction project bids have been very favorable due to low bids New bonds issued have low interest rates Recent and planned bond refundings have saved us over $535,000 in interest expense