The CITY of

EDINA

2016-2017 Budget

September1, 2015 Council Meeting

The CITY of

EDINAAgenda

• Definitions• Process and Timeline• Budget Challenges• HRA Levy• Tax Comparisons

www.EdinaMN.gov 2

The CITY of

EDINADefinitions• General Fund: The main operating fund of the City’s

government functions. Includes about $37M of revenues and expenditures.

• Governmental Funds: In addition to the general fund, the City has a debt service fund, construction fund, HRA fund, and several special revenue funds. Annual expenditures are about $60-$70M.

• Enterprise Funds: Used to account for “business-type” activities. Total annual expenses equal about $40M

• Consolidated Budget: Approximately $100M in total revenues and expenditures/expenses and includes all City and HRA funds, governmental and enterprise.

www.EdinaMN.gov 3

The CITY of

EDINADefinitions

www.EdinaMN.gov 4

Edina Consolidated Budget $100M

Governmental Funds $60-

$70M General Fund $37M

Debt Service

Fund $7M

Construction Fund $15M

Special Revenue Funds, including

HRA

Enterprise Funds $40M

Utility Fund $16M

Liquor Fund $12M

Park Enterprises

$11M

The CITY of

EDINADefinitions• Estimated Market Value: One way to measure “tax

base”. The City Assessor estimates values for each property in Edina. The total EMV of all properties in Edina is around $10B.

• Tax Capacity: A second way to measure “tax base”. Tax capacity is a uniquely Minnesotan way of calculating property taxes. Tax capacity uses EMV and property classifications so that different types of property are taxed differently.

www.EdinaMN.gov 5

The CITY of

EDINADefinitions• Total City Property Tax Levy or Levies: Often

described as one, but the City actually has several different levies organized by purpose.

• General Fund Property Tax Levy: The dollar amount that the City needs from property taxes to pay for General Fund expenditures. About $25M of the $37M General Fund budget (68%).

• Debt Levies: Edina has several debt levies that go towards principal and interest payments on some of the City’s debt. The City also has debt that is paid by revenue other than property taxes, like our utility fund debt and special assessment debt.

• Other Levies: Arts & culture, equipment, and HRA are examples.

www.EdinaMN.gov 6

The CITY of

EDINAAgenda

• Definitions

• Process and Timeline• Budget Challenges• HRA Levy• Tax Comparisons

www.EdinaMN.gov 7

The CITY of

EDINAWork Plan Drives Budget

www.EdinaMN.gov 8

Work PlanThemes

• Council

Work PlanGoals

• Staff

Budget• Staf

f

The CITY of

EDINABiennial Budget Process

www.EdinaMN.gov 9

Even Year: CIP Focus

First year of biennial budgetUpdate operating budget for odd yearReview CIP in detail

Odd Year: Operating Budget Focus

Second year of biennial budgetPlan for next biennial budget

The CITY of

EDINABudget TimelineApril 21 City Manager presents 2016-2017 proposed work plan to

Council

May 15 Department Heads send budget requests to Finance

July 8 ELT reviews 2016-2017 budget draft

July 21 City Manager presents 2016-2017 budget draft to Council

Sept. 1 City Council adopts preliminary 2016 property tax levy and budget

Sept. 16 City Council adopts new water/sewer connection charges and utility rates based on the rate study discussed on July 7

Dec. 1 Public Hearing & option to adopt 2016 final property tax levy and budget.

Dec. 15 Deadline to adopt final 2016 property tax levy and budget

www.EdinaMN.gov 10

The CITY of

EDINAAgenda

• Definitions• Process and Timeline

• Budget Challenges• HRA Levy• Tax Comparisons

www.EdinaMN.gov 11

The CITY of

EDINA2016-2017 Budget Challenges• Minimum wage increase affects many positions in

Edina.• 11.5% rate cap for health insurance premiums.• FT employee count increased by 1 since last budget

cycle, but 4.2 increase in the General Fund is offset by a 3.2 decrease elsewhere.

• Edinborough & Centennial Lakes reserve balances are projected to decrease.

• Liquor profits are lower than past years• - 2014 budgeted transfer was $1,800,100 but actual was

$1,035,000• - 2015 budgeted transfer is $1,850,100 but actual will be less

than $1M • - Draft 2016 budgeted transfer is about $1.15M less than 2015

budget

www.EdinaMN.gov 12

The CITY of

EDINA2016-2017 Budget Challenges

www.EdinaMN.gov 13

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

Edina Liquor Profits Support City Services

Liquor operating income Budgeted Transfer

The CITY of

EDINA2016-2017 Budget Challenges• 2014 General Fund unassigned fund balance was $708,294.

This is lower than in the past, which affects our CIP funding.• Services and expectations are increasing for all

departments• Preliminary budget would result in about a 7.07%

property tax levy increase (City portion)• – new staff requests not included (5 total FT staff requests)• – GIS not included• – Weber Woods and many work plan items also not included• – Street sweeping expenses are being moved to Storm Utility

fund

• Council and staff have identified many possibilities, but priorities may need to be adjusted.

www.EdinaMN.gov 14

The CITY of

EDINABudget Summary

www.EdinaMN.gov 15

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20210.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

Total Property Tax Levy Increases vs. General Fund Expenditures

Total Levy Increase % Change in expenditures

Braemar Field Levy

Liquor revenue decrease

The CITY of

EDINA2016-2017 Work Plan Themes• Focused Redevelopment

• - PW site decision with community space + financing by 3/1/16

• - Hwy 100 lid study completed by 12/31/17• - Fred Richards plan + financing by 12/31/16

• Future Planning• - Comprehensive plan draft complete by 12/31/17

• Intergovernmental Relations

www.EdinaMN.gov 16

The CITY of

EDINA2016-2017 Work Plan Themes• Transportation & Infrastructure

• - Complete Grandview transportation study & plan by 12/31/17

• - Complete construction of street or woonerf• - Start construction on WTP #5 in 2017• - Study S’dale sanitary capacity & implement plan by

2017• - Convert debt retirement in 2017 into CIP funding• - Consider increasing franchise fees for streets by

12/31/16• Enterprise Stability

• - Complete business plans for each enterprisewww.EdinaMN.gov 17

The CITY of

EDINALevy Drivers

www.EdinaMN.gov 18

2016 2017

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2016 Employee wages & benefits

(4 new FT)

Lower Liquor transfer (GF por-

tion only)

2016 Inflation & all other changes

2017 Employee wages & benefits

Park bond levy expiration

2017 Inflation & all other changes

The CITY of

EDINAAgenda

• Definitions• Process and Timeline• Budget Challenges• HRA Levy• Tax Comparisons

www.EdinaMN.gov 19

The CITY of

EDINAHRA Levy for 2017

• State law allows an HRA to levy up to 0.0185% the previous year’s taxable market value of all property in the City. This limit would produce tax revenue of about $1.8M in Edina.

• An HRA raises its own levy separate from the City, and the HRA levy is not subject to levy limits (other than above)

• Levies collected by an HRA must be used only for purposes listed in the HRA Act.

• A $95,000 HRA levy in Edina would be $4/year for a median single family home ($457,300)

Sources: LMC Handbook for Cities, Edina Finance Dept., & Edina Assessing Division

www.EdinaMN.gov 20

The CITY of

EDINAAgenda

• Definitions• Process and Timeline• Budget Challenges• HRA Levy• Tax Comparisons

www.EdinaMN.gov 21

The CITY of

EDINAEstimated Market Value (EMV)

www.EdinaMN.gov 22

Source: City Assessor’s Office and Hennepin County

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $(800,000,000) $(600,000,000) $(400,000,000) $(200,000,000)

$- $200,000,000 $400,000,000 $600,000,000 $800,000,000

$1,000,000,000

0.7% 1.0% 1.4% 1.7% 1.9%0.7% 0.7% 0.9% 1.2% 1.3% 1.6%

7.5%

9.4%

2.5%

-0.5%

-3.4%

-5.9%

-3.5%-3.6%

0.0%

7.2%

4.5%

Edina EMV Property Tax Base Growth

Inflation/deflation due to real estate market forces Growth due to improvementsNew Construction % Unimproved Properties %

The CITY of

EDINAAnnual Property Taxes

www.EdinaMN.gov 23

Source: LMC Property Tax Calculator 7/20/15 & City Assessor’s Office

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

City tax

$944 $970 $1,012 $1,020 $1,042 $1,082 $1,102 $1,140 $1,195 $1,266

Total tax

$4,435 $4,597 $4,725 $4,922 $5,066 $5,410 $5,449 $5,606 $5,861 $-NaN

Median Value

$433,30

0

$444,80

0

$439,00

0

$432,70

0

$411,50

0

$403,10

0

$396,30

0

$399,70

0

$438,80

0

$457,30

0

$500

$2,500

$4,500

$6,500

$944 $1,195 $1,266

$4,435 $5,861

"Median" Edina Home Property Tax History

The CITY of

EDINAAnnual Property Taxes

www.EdinaMN.gov 24

Source: LMC Property Tax Calculator 7/20/15, Bureau of Labor Statistics 8/13/15 & City Assessor’s Office

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

City tax (2004 dol-lars)

$852 $834 $875 $863 $843 $849 $845 $851 $-NaN $-NaN

To-tal tax (2004 dol-lars)

$4,002 $3,954 $4,084 $4,162 $4,099 $4,245 $4,178 $4,186 $-NaN $-NaN

Median Value

$433,300 $444,800 $439,000 $432,700 $411,500 $403,100 $396,300 $399,700 $438,800 $457,300

$500

$2,500

$4,500

$852 $851

$4,002 $4,186

"Median" Edina Home Property Tax History Adjusted for CPI (2004 dollars)

The CITY of

EDINAProperty Tax Distribution

2015 Taxes on a Homestead property valued at $457,300 in the Edina school district.

www.EdinaMN.gov 25

County35%

City20%

School District

36%

Water-shed, Metro

Districts, & Other

9%

The CITY of

EDINA2016 Estimated Levy Impacts• In 2015 the median home pays about $100 per month

in property taxes to fund all of the City provided services.

• Tax capacity is increasing in Edina by about 6% for taxes payable in 2016. The median value single family home is now $457,300.

• If the budget includes an 7.07% property tax increase, the effect on the $457,300 single family home would be about:• - about 6% increase in City property taxes.• - about $71 increase per year, or about $6 per month.• - this home would pay about $106 per month in 2016

City property taxes.

www.EdinaMN.gov 26

The CITY of

EDINAGovernmental Revenue Per Capita

www.EdinaMN.gov 27

The total revenue approach:

2013 governmental revenue per capita

1 Plymouth $ 684.12

2 Minnetonka $ 875.60

3 Eden Prairie $ 881.88

4 Richfield $ 987.76

5 Edina $ 1,011.63

6 Hopkins $ 1,147.21

7 Maple Grove $ 1,192.77

8 St. Louis Park $ 1,240.14

9 Bloomington $ 1,488.13

10 Golden Valley $ 1,435.72

11 Minneapolis $ 2,020.35

Source: MN State Auditor website 7/7/15

The CITY of

EDINAProperty Tax Revenue Per Capita The tax per capita

approach:2013 Property tax revenue per

capita

1 Plymouth $ 399.98

2 Maple Grove $ 492.27

3 Richfield $ 515.37

4 Eden Prairie $ 520.78

5 Bloomington $ 541.53

6 St. Louis Park $ 542.23

7 Edina $ 546.40

8 Hopkins $ 575.73

9 Minnetonka $ 606.30

10 Minneapolis $ 773.91

11 Golden Valley $ 814.57 Source: MN State Auditor website 7/7/15

www.EdinaMN.gov 28

The CITY of

EDINACity Property TaxesThe property buyer approach: The property buyer approach:2014 estimated city taxes on

$400,000 house2014 estimated city taxes on

$400,000 house

1 Edina* $ 1,141 12 Burnsville*

$ 1,861

2 Plymouth* $ 1,202 13 St. Louis Park

$ 1,937

3 Eden Prairie* $ 1,424 14 Bloomington*

$ 1,941

4 Shoreview* $ 1,495 15 Apple Valley*

$ 1,995

5 Minnetonka* $ 1,559 16 Maplewood*

$ 2,008

6 Eagan* $ 1,593 17 Savage*

$ 2,269

7 Woodbury* $ 1,622 18 Golden Valley

$ 2,466

8 Lakeville* $ 1,650 19 Hopkins

$ 2,496

9 Shakopee* $ 1,673 20 Richfield

$ 2,571

10 Maple Grove* $ 1,685 21 Minneapolis

$ 2,976

11 Inver Grove Heights* $ 1,859

Source: LMC Property Tax calculator 7/7/15

*City is a member of the MLC

www.EdinaMN.gov 29