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2019 Proposed Budget November 19, 2018
Agenda• Budget Highlights• Property Tax• Tax Base
– Taxable Market Value, Tax Capacity, Tax Levy, Tax Rate – Tax Impact on Homes & Businesses– Comparable City Tax Rates
• Council Member Freyberg Comments• Capital Investment
– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion
• Equipment and Vehicle Replacement• Facilities Replacement• Caswell Investment
2
Agenda
3
• Budget Highlights• Property Tax• Tax Base
– Taxable Market Value, Tax Capacity, Tax Levy, Tax Rate – Tax Impact on Homes & Businesses– Comparable City Tax Rates
• Council Member Freyberg Comments• Capital Investment
– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion
• Equipment and Vehicle Replacement• Facilities Replacement• Caswell Investment
Budget Highlights
• North Mankato is growing – Updated from County – 9% increase in market value ~102 million
• New construction ~14 million (14% of increase)• Annexations ~1 million (1% increase)• Value increases account for balance
• Based on updated Assessor figures, tax rate estimated to decrease 0.8% to 51.3%– $600K in new taxes to be captured
4
Budget Highlights, cont. • All funds meet budget reserve policies as
established by the City Council• No new FTEs for 2019, but includes new street
and police employees approved in 2018 being added to budget moving forward
• Utility Rates– Recycling rate increases
All sizes - $1.00/month
5
Budget Highlights, cont. • Expenditure highlights – Overall increase of $992K• Net of transfers increase of $652,000 (3%)
– 2010C Refunding Payment Increase ------------ $400,000– Facilities Replacement ----------------------------- $250,000– New Street Employee -------------------------------- $80,000– Employee Merit Pool (3%) -------------------------- $63,000– Temp. Labor - Parks & Fire Dept. Rental Insp. -- $53,000– Parks Plan Budget Increase ------------------------- $50,000– Health Insurance Increase (7%) ------------------- $46,000– Swim Facility Operations ---------------------------- $30,000– Pavement Management Plan Increase ---------- $20,000
6
Budget Highlights, cont.
• Revenue highlights, cont.– Utility Funds – $399K increase
• Water Utility collections ------------------------ $45,000• Water Fund interest collections --------------- $49,000• Wastewater Utility collections ----------------- $35,000• Wastewater interest collections ----------------- $9,000• Solid Waste Utility collections -------------------- $6,000• Recycling Utility collections and facility rent - $65,000• Recycling Transfer from D/S ---------------------- $30,000• Storm Water Utility collections -------------------- $9,000• Storm Water One-time Transfer from D/S --- $150,000
7
Budget Highlights, cont.
• Revenue highlights, cont.– Capital Facilities Fund transfer ---------- $250,000– Joint Econ Dev. Fund transfer ------------ $250,000– CDBG Fund activity ------------------------- ($67,000)– Debt Service Fund assessments --------- ($56,000)– Debt Service tax levy ----------------------- ($23,000)– Construction Fund Bond Proceeds -- ($2,670,000)
8
Agenda• Budget Highlights• Property Tax• Tax Base
– Taxable Market Value, Tax Capacity, Tax Levy, Tax Rate – Tax Impact on Homes & Businesses– Comparable City Tax Rates
• Council Member Freyberg Comments• Capital Investment
– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion
• Equipment and Vehicle Replacement• Facilities Replacement• Caswell Investment
9
Adopted Preliminary Tax Levy
10
• The total general property taxes proposed by the City of North Mankato for 2019 is $6,934,509
• General Fund $ 5,290,719• Port Authority $ 75,000• Debt Service $ 1,375,458• Abatement Levy $ 193,332
• Preliminary 2019 levy dollar amount is $646,000 more than the 2018 levy
• Tax Rate = Tax Levy/Total Tax Capacity • Total tax capacity increase is larger than the tax levy increase
which leads to a decrease in tax rate
52.124 51.6002018 2019
Property Tax, cont.
11
2018 Amount 2019 AmountDollar
Amount % Change
General Fund Levy $ 4,621,889 $ 5,290,719 $ 668,830 14.47%
Port Authority 75,000 75,000 $ - 0.00%
Debt Service 1,370,848 1,375,458 $ 4,610 0.34%
Tax Abatement 221,014 193,332 $ (27,682) (12.52)%
Total Tax Levy $ 6,288,751 $ 6,934,509 $ 645,758 10.27%
Property Tax, cont.
12
4,814,154 5,152,123 5,383,784 5,383,784 5,596,414 5,794,404 5,910,292 6,288,751
6,934,509
45.425%50.598%
54.566%54.009% 53.620% 53.606%
52.485%52.124%51.600%
0.000%
10.000%
20.000%
30.000%
40.000%
50.000%
60.000%
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
TAX
RATE
TAX
LEVY
Total Levy
Property Tax, cont.
13
Tax Payble Taxable Market Total Tax Change in Total Tax
Year (1) Value Capacity Tax Capacity Levy Rate
2011 874,093,000 10,244,392 -3.3% 4,814,154 45.425%
2012 870,672,800 10,177,574 -0.7% 5,152,123 50.598%
2013 934,541,100 9,861,666 -3.1% 5,383,784 54.566%
2014 856,913,400 9,963,464 1.0% 5,383,784 54.009%
2015 898,283,600 10,402,923 4.4% 5,596,414 53.620%
2016 920,184,000 10,809,230 3.9% 5,794,404 53.606%
2017 974,012,800 11,255,834 4.1% 5,910,292 52.485%
2018 1,041,251,400 12,373,308 9.9% 6,288,751 52.124%
2019 Proposed 1,134,308,600 13,438,971 8.0% 6,934,509 51.600%
2020 Est. 1,156,994,772 13,707,750 2.0% 7,073,199 51.600%
Agenda
14
• Budget Highlights• Property Tax• Tax Base
– Taxable Market Value, Tax Capacity, Tax Levy, Tax Rate – Tax Impact on Homes & Businesses– Comparable City Tax Rates
• Capital Investment– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion
• Equipment and Vehicle Replacement• Facilities Replacement• Caswell Investment
Taxable Market Value History
832,560,000
929,989,400
847,806,500
975,204,800
1,041,251,400
1,134,308,600
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
1,100,000,000
1,200,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Proposed
Taxable Market Value
Tax Capacity & Tax Rate
16
Tax capacity is a unique property taxing tool that is equivalent to multiplying the taxable market value of a property by its relevant class rate. The local tax rate of a taxing jurisdiction is determined by dividing the jurisdiction’s levy by the jurisdiction’s taxable net tax capacity. Rates often move in the opposite direction of tax capacity as shown in the chart above.
40.000%
42.000%
44.000%
46.000%
48.000%
50.000%
52.000%
54.000%
56.000%
9,000,000
9,500,000
10,000,000
10,500,000
11,000,000
11,500,000
12,000,000
12,500,000
13,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tax
Rate
Tax
Capa
city
Tax Capacity & Tax Rate
Tax Capacity Tax Rate
North Mankato Property Types
17
3,911, 78%
17, 0%
242, 5%664, 13%
175, 4%
2, 0%
Property Type Breakdown
Residential
Agriculture
Commercial/Industrial/Public Utility
Rental/Non-homestead (apartments, MF. Homeparks, etc.)
Exempt properties
PILOT Properties (tax forfeited)
North Mankato Taxes Paid by Property Type
18
3,692,923.89, 57%
24,751.60, 0%
1,907,692.01, 30%
827,586.30, 13%
212.67, 0% 0.00, 0%
City Taxes Paid Breakdown
Residential
Agriculture
Commercial/Industrial/Public Utility
Rental/Non-homestead (apartments, MF. Homeparks, etc.)
Exempt properties
PILOT Properties (tax forfeited)
Median and Maximum City Taxes Paid
19
839.72 1,283.03
3,307.79
180.87 -
500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00
Median Taxes Paid
Median Taxes Paid
5,764.91 3,421.94
65,827.40
49,050.77
- 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 60,000.00 70,000.00
Max Taxes Paid
Max Taxes Paid
Agenda• Budget Highlights• Property Tax• Tax Base
– Taxable Market Value, Tax Capacity, Tax Levy, Tax Rate – Tax Impact on Homes & Businesses– Comparable City Tax Rates
• Council Member Freyberg Comments• Capital Investment
– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion
• Equipment and Vehicle Replacement• Facilities Replacement• Caswell Investment
20
Council Member Freyberg Comments
• Population has grown 7% while total tax levy increase of 28% and general levy increase of 50% in 10 years
• Only new construction and annexation should be used in growth calculation; not market value increases (too volatile)
• Local option sales tax and lodging tax trending down• Average age increasing • Need to create budget with modest increases
21
Council Member, cont.
• Scenario of using only new construction for calculating tax rate and levy– Market Value increase of $15 million vs. $102 million– Tax Capacity increase of $160,000 vs. $1 million – Tax levy increase of $178,000 vs. $645,000– $467,000 to cut from budget
• Recap of expenditure highlights – Possible cuts in red total $320,000
• Tax rate decrease from 51.6% to 48.1% a decrease of 3.5%
22
Budget Highlights, cont. • Expenditure highlights – Overall increase of $992K• Net of transfers increase of $652,000 (3%)
– 2010C Refunding Payment Increase ------------ $400,000– Facilities Replacement ----------------------------- $250,000– New Street Employee -------------------------------- $80,000– Employee Merit Pool (3%) -------------------------- $63,000– Temp. Labor - Parks & Fire Dept. Rental Insp. -- $53,000– Parks Plan Budget Increase ------------------------- $50,000– Health Insurance Increase (7%) ------------------- $46,000– Swim Facility Operations ---------------------------- $30,000– Pavement Management Plan Increase ---------- $20,000
23
Budget Highlights, cont.
• Comparing population growth to tax levy growth is not an indicator of fiscal restrain
• Measure of two different variables• Tax levy increase 1998-2008 of 70%• Tax levy increase 2008-2017 of 35%• The average increase over this timeframe was
$290,000/year• When factoring in labor costs, capital set asides and
inflation these
24
Budget Highlights, cont.
• Development since 2008:– 292 single family homes– 8 twin homes– 95 townhome units– 18 apartments and assisted living facilities totaling
103 units– 300,000 sq. ft. of industrial/commercial
development
25
Budget Highlights, cont.
• City activity since 2008:• LGA allotments in 2008 & 2009• LGA reduction in 2010 & 2011• LGA freeze 2012 & 2013• Parks: Benson Park expansion, Reserve Park, Caswell North
constructed• Taylor library expansion• Trail expansions• Increased Caswell Sports activities• Public art• Downtown parking lot
26
• Question of how to develop policy• THe policy question is how to you want the
budget developed:– One side indicates only taxable growth– The other side consists of department head and
citizen input, strategic plans, and funding flow impact of needs
27
Agenda• Budget Highlights• Property Tax• Tax Base
– Taxable Market Value, Tax Capacity, Tax Levy, Tax Rate – Tax Impact on Homes & Businesses– Comparable City Tax Rates
• Council Member Freyberg Comments• Capital Investment
– Annual Allocation– Infrastructure and Maintenance– 2019-2028 CIP Discussion
• Equipment and Vehicle Replacement• Facilities Replacement• Caswell Investment
28
Capital Investment Annual Allocation
29
2015 2016 2017 2018 2019
Parks Plan $ 75,000 $ 200,000 $ 345,000 $ 350,000 $ 400,000
Street Maintenance Plan $ 200,000 $ 350,000 $ 400,000 $ 380,000 $ 400,000
Vehicle & Equipment Replacement $ 222,000 $ 830,000 $ 151,500 $ 393,000 $ 233,000
Building Maintenance $ 30,000 $ 110,000 $ 423,300 $ 82,000 $ 297,000
Sidewalk Maintenance $ - $ - $ - $ 5,000 $ 24,000
Water Fund $ 165,000 $ 165,000 $ 367,800 $ 297,300 $ 300,000
Sewer Fund $ 300,000 $ 145,000 $ 245,500 $ 250,000 $ 250,000
Storm Water Fund $ 42,500 $ 42,500 $ 32,500 $ 30,000 $ 40,000
TOTAL $1,034,500 $1,842,500 $1,965,600 $1,787,300 $1,944,000
Infrastructure & Maintenance
• Street Life Cycle– Construct– Seal Coat every 5-7 years– Mill & Overlay every 15 years– Hydrant, valves, manholes,
and catch basins testing and inspections every 1-2 years
– Repairs as needed
30
• Facilities Life Cycle– Construct– Inspect every year– HVAC 5-10 Years– Furnishes and finishes 5-10 years– Re-Roof 10-20 years– Windows 10-20 years– Parking Lot Maint. – follow streets
2019 Equipment & Facilities Replacement
31
Project or Activity Strategic Program Area
2018-2022 2019-2023 Variance
Loader Infrastructure 150,000 150,000 -
General Equipment - Trucks, Skid loaders, Mowers, etc. Infrastructure 240,000 240,000 -Police Cruiser Public Safety 190,000 190,000 -Squad Cameras Public Safety 35,000 - (35,000)Detective Squad Public Safety 40,000 40,000 -Land purchase 233 Wheeler, 231 Wheeler Comm. Dev. 284,000 272,000 (12,000)Truck Community Development Comm. Dev. 25,000 25,000
Sirens - Upgrade (from 2012), Plant #2, Expansion, City Shop Public Safety 54,000 54,000 -
Tandem Dump Truck with Plow, Wing and Sander (3) Infrastructure 675,000 500,000 (175,000)Roller (2) Infrastructure 60,000 (60,000)
Street department roof / Public Works Yard Evaluation Infrastructure 20,000 - (20,000)Mechanics Shop - update doors Infrastructure 15,000 - (15,000)
Front Desk and Community Development Desk Remodel Admin/Leg. 50,000 - (50,000)Lower Level Remodel Admin/Leg. 15,000 (15,000)Fire Engine Public Safety 110,000 110,000 -Overhaul Air Pack/Work Room - 40,000 40,000 Overall FD Community Room Kitchen 25,000 25,000 Parks Mower Replacement 180,000 180,000
Sub-Total Cash / Capital Facilities & Equipment Replacement 1,938,000 1,826,000 (112,000)
2019 Equipment & Facilities Replacement
• New for 2019-2023– Mowers: $90,000/unit – 2019 & 2020 – Snow Plows: $250,000/unit – 2020 & 2022. One
purchased in 2018– Truck for Community Development: $25,000– Squad Cameras purchased in 2018– Land purchase final payments– Rollers allocated to future years– Street shop part of bigger project
32
CIP Discussion
• $2,000,000 used as annual capital set aside in CIP and debt issuance
• Projects Identified for 2019:– Tyler Ave. Reconstruction ---- $ 500,000– Commerce Dr. City Portion --- $ 500,000– TBD Project ----------------------- $1,000,000
33
CIP Discussion, cont.
• Aging City Facilities– Public Works Facility– Facilities maintenance plan
• Ravine Maintenance– Heavy rains lead to ravine slough – Ravine maintenance plan
• Recreational Facilities – Caswell over 30 years old– Sales tax extension, partly toward recreational facilities
34
CIP Discussion, cont.
35
Project or Activity Strategic Program Area
2019 PROPOSED
2020 FORECAST 2021 FORECAST 2022 FORECAST 2023 FORECAST Estimated 5 year costs
Tyler Ave. Reconstruct Infrastructure 500,000 500,000
PW Building Infrastructure -
Caswell Park Improvements Recreation -
Safe Routes to School - Dakota Meadows Infrastructure 151,000 151,000
Safe Routes to School -Monroe/Bridges Infrastructure 168,000 168,000
Commerce Dr. City Portion Infrastructure 500,000 500,000
TBD Project Infrastructure 1,000,000 - 1,000,000
TBD Project Infrastructure - 1,849,000 1,849,000
TBD Project Infrastructure 1,832,000 1,832,000
TBD Project Infrastructure 2,000,000 2,000,000
TBD Project Infrastructure 2,000,000 2,000,000
Sub-Total Bonds 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 10,000,000
2019 Debt Service Funds
36
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Current & Future G.O. Debt of $2.0 Million/Annually
Total Existing 2018A 2019A 2020A 2021A 2022A
Next Steps
• Proposed Levy and Date(s) for Truth-in-Taxation (TnT) approved at Regular Meeting
• TnT – December 3rd 7:00 PM• Final Levy and Budgets adopted – December
17th
37