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12-03-18 CC Truth In Taxation Agenda Packet CITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD CITY COUNCIL SPECIAL MEETING COUNCIL CHAMBERS MONDAY, DECEMBER 3, 2018 7:00 P.M. AGENDA Attachments 1. CONVENE CITY COUNCIL SPECIAL MEETING A. Roll Call Mayor Zerby ____ Labadie____ Siakel ____ Sundberg____ Johnson ____ B. Review Agenda 2. TRUTH-IN-TAXATION PUBLIC MEETING Finance Director memo A. Truth-In-Taxation Presentation B. Public Comment C. Consider Quote for MCC Stormwater Improvements 3. ADJOURN 2A MEETING TYPE City of Shorewood Council Meeting Item Special Meeting 2018 Truth-in-Taxation Presentation Title / Subject: Meeting Date: December 3, 2018 Prepared by: Joe Rigdon, Finance Director Reviewed by: Greg Lerud, City Administrator Attachments: Truth-in-Taxation PowerPoint Presentation Notable Budget Changes General Fund 2019 Budget Shorewood Community & Event Center 2019 Budget Enterprise Funds 2019 Budgets Capital Improvement Plan 2019-2028 Capital Project Funds 2019 Budgets Policy Consideration: The City Council is required by statute to consider public input at this Truth-In- Taxation meeting prior to adopting the property tax levy and budget for 2019. For this meeting, the City Council holds a public meeting to allow taxpayers to discuss the budget in general, department budgets, and the amount of property taxes levied by the City of Shorewood. This meeting is not structured for property owners to discuss individual property values, which were set earlier in the year at the Open Book and Board of Review process held from April through June. The required elements for the Truth-in-Taxation process are: 1.The proposed property tax levy must be certified to the county auditor by September 30. 2.The public meeting is held at the scheduled time and place indicated on the TNT notice. 3.The proposed budget and property tax levy are discussed at the meeting. 4.The public is invited and allowed to speak and to ask questions concerning the budget and proposed property taxes at the public meeting. 5.The final property tax levy and the final budget are adopted. 6.The final property tax levy may not exceed the preliminary certified property tax levy. 7.The final property tax levy must be certified to the county auditor by no later than December 28. 8.The Certification of Truth in Taxation Compliance form is filed with the Minnesota Department of Revenue after the final property tax levy is adopted, but no later than December 28. Background: The property tax system’s general timeline is as follows:  January 2, 2018 – A property market value is set for each parcel in the City by the Hennepin County Assessor.  March, 2018 – Valuation notices are sent to each parcel with the new estimated property value. Mission Statement: The City of Shorewood is committed to providing residents quality public services, a healthy environment, a variety of attractive amenities, a sustainable tax base, and sound financial management through effective, efficient, and visionary leadership. Page 1  April-June, 2018 – Open Book meeting at City Hall and valuation appeals to the Hennepin County Board of Equalization. This will finalize the value to be used for Truth-in-Taxation estimates and 2019 property taxes.  July-September, 2018 – City Council discusses the General Fund budget and property tax levy for 2019.  September 30, 2018 – The preliminary tax levy is certified to Hennepin County.  November, 2018 – A Truth-in-Taxation parcel-specific notice is mailed to each property owner with the estimated taxes identified for each taxing jurisdiction - County, City, School District, Metropolitan Council, Watershed District, and other minor taxing districts.  December 3, 2018 – Shorewood City Council holds the Truth-in-Taxation meeting.  December 10, 2018 – Shorewood City Council adopts a tax levy and budget for 2019.  December 28, 2018 – Final tax levy is certified to Hennepin County and Certification of Truth in Taxation Compliance form is filed with the Minnesota Department of Revenue.  May 15, 2019 – 2019 first half taxes are due at Hennepin County. General Fund Budget & Property Tax Levy: On September 10, 2018, the City of Shorewood adopted the proposed 2019 General Fund budget. In addition, the city adopted the “2019 Proposed Levy Certification” for submission to the Hennepin County Auditor. Overall proposed 2019 General Fund expenditures and transfers out are budgeted at $6,319,948, or a 1.4% increase from the 2018 General Fund budget. Included is an increase to operating expenditures of $63,906, or 1.3%. Total transfers out are budgeted to increase by $22,410, or 1.9%. This includes a $5,000 increase for capital equipment, and a $25,000 increase for streets. General Fund 2019 revenues and transfers in are budgeted at $6,273,532, or a 3.5% increase over the 2018 budget. Of the $213,997 increase in revenues and transfers in, $161,077 is proposed to be generated from the property tax levy. To balance the 2019 General Fund budget, a “use of reserves” of $46,416 is proposed. This compares to a budgeted use of General Fund reserves of $174,097 within the 2018 budget. The City’s 2019 preliminary property tax levy of $5,530,322 is 3.0% higher than the 2018 total levy of $5,369,245. The City is proposing to decrease the payable 2019 City tax rate by 0.3% from 28.635% in 2018 to 28.537% in 2019. In other words, property owners with no change in market values from payable 2018 to payable 2019 should experience a 0.3% decrease in the City portion of their overall property tax bill. In the event of a market value decrease or increase from payable 2018 to payable 2019, City property taxes would change proportionately. The City Council adopted a preliminary General Fund budget and 3.0% property tax levy increase on 9/10/18. That information was sent to Hennepin County who used the County Assessor’s property values to determine an estimated tax rate for each overlapping jurisdiction. This information was combined with preliminary tax information from other taxing jurisdictions to create a Truth-in-Taxation statement for each property. Shorewood Community & Event Center Budget: The Shorewood Community & Event Center is funded by facility rentals and annual transfers from the General Fund. For 2019, a transfer of $70,000 is scheduled to assist with operations, and a $32,300 transfer is projected to assist with building improvements. Enterprise Fund Budgets: The City maintains and budgets four enterprise funds: Water, Sewer, Storm Water, and Recycling. These funds are supported by user charges/utility fees. The Enterprise Fund budgets have not substantially changed since the previous presentation on 8/27/18. The budget format is one in which the enterprise full accrual accounting method is utilized. For example, depreciation expense is listed as a line item, while capital outlays are not. This format tracks the City’s annual financial reporting process to maintain comparability. An approximation of each utility enterprise fund’s change in overall cash is included (Water, Sewer, and Storm Water). Capital Improvement Plan 2019-2028: The Capital Improvement Plan is largely unchanged from the previous presentation on 11/13/18, with the exception of the following changes made to reconcile with the Engineer’s report:  Moved $150,000 Strawberry Ln ROW acquisition from 2023 to 2019  Added in $123,000 Lake Linden Rd mill and overlay for 2019  Added in $43,000 Cardinal Dr mill and overlay for 2019 Also, a pressure washer for public works in 2019 is now included. The CIP provides an estimation of the timing and cost of future projects. Future fund balance surplus (deficit) projections for the City’s various capital project funds are included to assist in financial planning. The 2019 amounts in the capital project fund projections are considered to be the 2019 budgets. Financial or Budget Considerations: The General Fund budget and property tax levy presented at this meeting are the same as the preliminary General Fund budget and preliminary property tax levy certified to Hennepin County. This raises the 2019 property tax levy 3.0% higher than the 2018 property tax levy. Options: If time does not allow all interested parties to provide input or the City Council would like more time to discuss the budget and/or property tax levy, the public meeting may be continued at the 12/10/18 City Council meeting. Recommendation / Action Requested: Staff recommends that the City Council hold the public meeting and accept public input on the proposed budget and property tax levy. Next Steps and Timelines: The 2019 final General Fund budget and property tax levy will be on the 12/10/18 City Council agenda for approval. Additionally, the 2019-2028 Capital Improvement Plan and 2019 budgets for the Shorewood Community & Event Center, capital project funds, and enterprise funds will be on the agenda for approval. Connection to Vision / Mission: This item contributes to sound financial management by providing effective City services at a reasonable price.